Thedéen: Likely with another interest rate cut

It is likely that the interest rate will be lowered again within six months, according to the Central Bank Governor Erik Thedéen.

» Published: January 15 2025

Thedéen: Likely with another interest rate cut
Photo: Lars Schröder/TT

"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.

Tags

TTT
By TTThis article has been altered and translated by Sweden Herald

More news

Food Prices Stabilize as Supermarkets
3 MIN READ

Food Prices Stabilize as Supermarkets Compete for Shoppers

EU Prepares Response to US
2 MIN READ

EU Prepares Response to US Tariffs as Trade Tensions Rise

Gold Prices Soar to Record
1 MIN READ

Gold Prices Soar to Record Highs Following Trump's Tariff News

Colombia Plans to Acquire Swedish
1 MIN READ

Colombia Plans to Acquire Swedish Jas Gripen Fighter Jets

Tokyo Stocks Drop Sharply Following
1 MIN READ

Tokyo Stocks Drop Sharply Following US Tariff Announcement

World Leaders Urge US to
2 MIN READ

World Leaders Urge US to Rethink Tariffs to Avoid Trade Conflict

US Finance Minister Urges Nations:
1 MIN READ

US Finance Minister Urges Nations: Hold Off on Retaliating to Tariffs

Trump's Tariffs Higher Than Expected,
2 MIN READ

Trump's Tariffs Higher Than Expected, Experts Warn of Lingering Uncertainty

Sweden Ready to Tackle Trump's
2 MIN READ

Sweden Ready to Tackle Trump's EU Tariffs, Says PM Kristersson

Trump's Tariffs Spark Global Economic
2 MIN READ

Trump's Tariffs Spark Global Economic Uncertainty, Experts Warn

Trump Announces 20 Percent Tariffs
3 MIN READ

Trump Announces 20 Percent Tariffs on EU Goods

APM Terminals Acquires Key Railway
1 MIN READ

APM Terminals Acquires Key Railway by Panama Canal

Volvo CEO Calls Trump's Tariffs
2 MIN READ

Volvo CEO Calls Trump's Tariffs a Messy Challenge for Swedish Industry

Amazon and AppLovin Eye TikTok's
2 MIN READ

Amazon and AppLovin Eye TikTok's US Operations for Acquisition

Wall Street Gains as Investors
2 MIN READ

Wall Street Gains as Investors Await Trump's Tariff Announcement

Tesla Sales Plummet in Q1,
1 MIN READ

Tesla Sales Plummet in Q1, Miss Analyst Expectations by Wide Margin

US Private Sector Adds 155,000
1 MIN READ

US Private Sector Adds 155,000 Jobs in March, Surpassing Expectations

China Limits US Investments as
1 MIN READ

China Limits US Investments as Trade Tensions Rise

Ben & Jerry's Co-Founder Seeks
2 MIN READ

Ben & Jerry's Co-Founder Seeks to Reclaim Brand from Unilever

Nintendo Switch 2 Launches June
1 MIN READ

Nintendo Switch 2 Launches June 5 with New Games and Features

Northvolt Labs in Västerås to
1 MIN READ

Northvolt Labs in Västerås to Lay Off 550 Employees

FI Warns of Rising Fees
2 MIN READ

FI Warns of Rising Fees for Housing Associations as Costs Climb

Volvo Cars Sees 10 Percent
1 MIN READ

Volvo Cars Sees 10 Percent Drop in March Sales, Electric Models Hit Hard

Stockholm Stocks Slide as Tariff
2 MIN READ

Stockholm Stocks Slide as Tariff Concerns Hit Major Companies

Genre image
1 MIN READ

Systemair CEO Roland Kasper Steps Down After a Decade

Dustin Announces Billion-Kronor Boost as
1 MIN READ

Dustin Announces Billion-Kronor Boost as Shares Drop 7 Percent

Folksam Divests Tesla Shares Over
2 MIN READ

Folksam Divests Tesla Shares Over Swedish Labor Dispute

Trump Set to Announce New
2 MIN READ

Trump Set to Announce New Tariffs as Global Markets Brace

Stockholm Stock Exchange Faces Decline
1 MIN READ

Stockholm Stock Exchange Faces Decline as Futures Point Downward

Trump's Tariffs Predicted to Slow
1 MIN READ

Trump's Tariffs Predicted to Slow Global Economy Growth

Construction Sector Sees Modest Growth
1 MIN READ

Construction Sector Sees Modest Growth with Housing and Government Boost

Asian Markets Show Mixed Reactions
1 MIN READ

Asian Markets Show Mixed Reactions Ahead of Trump's Tariff News

Sweden's Housing Market Faces Uncertainty
2 MIN READ

Sweden's Housing Market Faces Uncertainty as Interest Rate Fears Loom

Motorhome Registrations Surge 59 Percent
1 MIN READ

Motorhome Registrations Surge 59 Percent in 2025

Wall Street Closes Mostly Up
1 MIN READ

Wall Street Closes Mostly Up After Volatile Day

Swedish Paper Industry Secures Two-Year
1 MIN READ

Swedish Paper Industry Secures Two-Year Wage Agreement

Trump's New Tariffs on Imports
1 MIN READ

Trump's New Tariffs on Imports Set to Take Effect Today

Sweden to Acquire C-390 Transport
1 MIN READ

Sweden to Acquire C-390 Transport Aircraft in Joint Deal with EU Partners

Finland Shuts Down Last Coal
1 MIN READ

Finland Shuts Down Last Coal Plant, Slashing Emissions by 50 Percent

Volvo and Major Automakers Fined
1 MIN READ

Volvo and Major Automakers Fined 458 Million Euros for Cartel Involvement