"As we said at our monetary policy meeting just before Christmas, it is likely that the interest rate will be lowered again during the first half of the year, given that our forecasts hold," he said according to a prepared speech he held at Swedbank on Wednesday.
But he warned that the development could go in a different direction. He pointed, among other things, to the increasingly expensive dollar and that long-term market interest rates have begun to rise, as well as the fixed mortgage interest rates, in the wake of the American economy's development. This has made the Swedish Central Bank somewhat more cautious.
Feeling our way forward
There are, of course, several economists who believe that two rate cuts are needed during the spring. How do you view that?
You have to ask them what assessment they make of inflation and the economy. Our assessment is that the economy is recovering, and that inflation is in line with the target with this rate cut that is in our forecast. But it is not possible to rule out that we end up in a scenario where we are not now, says Thedéen to TT after the speech.
There is a bit of caution in your interest rate assumptions going forward. What are you most worried about, so that you don't press the interest rate cut button?
I point to some clouds on the horizon. I shouldn't exaggerate them, it was a way for me to show that the discussion sometimes becomes very taken up by the fact that: now there are no inflation risks left, now we can just lower the interest rate.
Better now than later
Vice Governor Aino Bugge also held a speech earlier during the day. She sees signs that the Swedish economy is near a turnaround after a period of low growth.
But she wants the Swedish Central Bank to lower the interest rate again, and soon.
"It is better to do it in the near future rather than to wait," said Aino Bugge in a speech according to a press release from the Swedish Central Bank.
The speeches were held two weeks before the next interest rate decision from the Swedish Central Bank, scheduled for January 29.
Economists expect one or two rate cuts during the first quarter of the year, down to 2.25 percent or 2.00 percent, according to a recent survey from the news agency Bloomberg. The Swedish Central Bank has only sketched out one rate cut to 2.25 percent in its latest interest rate path.
Variable mortgage interest rates usually follow the interest rate upwards and downwards.
If the mortgage interest rate on a mortgage loan of 3 million kronor were to decrease by 0.50 percentage points, it would reduce the interest cost by 15,000 kronor per year or 1,250 kronor per month – if you disregard the effects of the interest deduction.
