Increased Probability of Interest Rate Cut

The market is increasingly convinced that the Swedish Central Bank will lower the interest rate by 0.25 percentage points at the end of January, as shown by the pricing among market players.

» Published: January 16 2025

Increased Probability of Interest Rate Cut
Photo: Fredrik Sandberg/TT

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The probability in pricing is currently at 80 percent, according to a report from SEB's economists. Just two weeks ago, it was over 50 percent.

The market is also almost convinced that there will be a decrease in the repo rate – but this decrease is expected to come first in May or June.

The Swedish Central Bank – which last year lowered the repo rate from 4.0 to 2.50 percent – has indicated that it expects a decrease below the first half of the year.

SEB's economists believe in two decreases, with the first on January 29 and the second in May, according to the report.

If the interest rate on a mortgage of three 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.

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By TTEnglish edition by Sweden Herald, adapted for local and international readers

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