SwedenLivingWorld world_2_fill WorldBusiness BusinessSports sports-soccer SportsEntertainmentEntertain

Major Bank: Absolutely Right of the Central Bank

The Governor of the Central Bank, Erik Thedéen, is open to three interest rate cuts this year. The news is dividing experts. Absolutely right by the Central Bank, assesses Swedbank's chief economist Mattias Persson.

» Updated: July 16 2024

» Published: June 27 2024

Major Bank: Absolutely Right of the Central Bank
Photo: Lars Schröder/TT

The Governor of the Riksbank, Erik Thedéen, is open to three interest rate cuts this year. The news is dividing experts.

Quite right of the Riksbank, assesses Swedbank's chief economist Mattias Persson.

Thursday's surprise from the Riksbank is that they are now open to the possibility of three interest rate cuts this year – that is, a policy rate of 3.00 per cent by the end of the year.

It was a bit more surprising and they signal that they want to move faster with interest rate cuts and that there is a high probability of an interest rate cut in August, says Handelsbanken's chief strategist Claes Måhlén to TT.

Disagree

Swedbank assesses that there is an 80 per cent probability that there will actually be a new cut in August. However, when it comes to the right way forward, the banks' experts are somewhat divided.

We think it's not quite so urgent and they (the Riksbank) are acting a bit faster than we think is an optimal strategy, says Claes Måhlén, and points to continued risk of inflation backlash.

It's a bit softer communication and it was good. We now expect cuts in August, November, and December. Inflation is clearly on its way down and there is even a risk that it becomes too low, says Mattias Persson.

Shares the view

His colleague at Nordea, Annika Winsth, also shares this view and sees no inflation concern at present.

There is rather a risk that inflation will be below target already in the June figures.

Why don't you think the Riksbank is cutting interest rates already now, then?

I think they would like to see central banks in the USA and EU indicating more cuts than they do today. We see a clear weakening of the labour market and if we soon have an inflation that is below target, it will put pressure on the Riksbank to cut interest rates.

The Riksbank now sees that inflation according to the KPIF measure will reach the inflation target of 2.0 per cent this year, from a previous assessment of 2.3 per cent.

Claes Måhlén, however, points out that, for example, American inflation has proven to be extremely persistent, and a crucial question is how willing Swedish companies are to raise prices?

We have seen a normalisation, but there are question marks. Then it's what happens to the Swedish krona, he says.

Tags

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

More news

European Inflation Revised Downward

European Inflation Revised Downward

Stockholm Stock Exchange Opens on Minus

Stockholm Stock Exchange Opens on Minus

More and more rush to declare

More and more rush to declare

Inflation Expectations Rise

Inflation Expectations Rise

Wallenberg does not believe in state rescue of Northvolt

Wallenberg does not believe in state rescue of Northvolt

Hard to find an apprenticeship for vocational programs

Hard to find an apprenticeship for vocational programs

Record win for Skistar: Prioritizing the mountains

Record win for Skistar: Prioritizing the mountains

Forecast: Cheap Electricity Due to High Water Levels

Forecast: Cheap Electricity Due to High Water Levels

Swedish trade unique - "can be price-increasing"

Swedish trade unique - "can be price-increasing"

Mostly Upwards on Asian Stock Exchanges

Mostly Upwards on Asian Stock Exchanges

Japan leaves the interest rate unchanged

Japan leaves the interest rate unchanged

SBAB: The Central Bank lowers the interest rate after the summer

SBAB: The Central Bank lowers the interest rate after the summer

Nvidia rolls into GM's vehicles

Nvidia rolls into GM's vehicles

Wall Street fell again – Tesla continues to plummet

Wall Street fell again – Tesla continues to plummet

New confidence for the oil fund's CEO

New confidence for the oil fund's CEO

Heavy decision on Northvolt this week

Heavy decision on Northvolt this week

Ikano Bank Cuts Back – 200 to Go

Ikano Bank Cuts Back – 200 to Go

Wage Negotiations in Final Stage – New Bids on the Way

Wage Negotiations in Final Stage – New Bids on the Way

Mortgage lenders raise interest rates

Mortgage lenders raise interest rates

The Hackers Struck When the Tax Return Opened

The Hackers Struck When the Tax Return Opened

New York dragged Stockholm Stock Exchange down

New York dragged Stockholm Stock Exchange down

Tesla competitor promises record-fast charging

Tesla competitor promises record-fast charging

Get your tax refund before Easter

Get your tax refund before Easter

Still Happy Faces on Asian Stock Exchanges

Still Happy Faces on Asian Stock Exchanges

Alphabet buys company for 333 billion kronor

Alphabet buys company for 333 billion kronor

This is how it went for the "party Swedes"

This is how it went for the "party Swedes"

The US stock market rose for the second day in a row

The US stock market rose for the second day in a row

Swedish drug candidate classified in the USA

Swedish drug candidate classified in the USA

Oil price rises after Trump's threats against Iran

Oil price rises after Trump's threats against Iran

Up to 7,500 jobs away from Audi

Up to 7,500 jobs away from Audi

USA's retail trade below expectations

USA's retail trade below expectations

Klarna's giant deal in the USA - "game changer"

Klarna's giant deal in the USA - "game changer"

Major Bank Raises Mortgage Interest Rates

Major Bank Raises Mortgage Interest Rates

Busch hopes for battery support from the EU

Busch hopes for battery support from the EU

OECD: Trump's Trade War Slows Down the Global Economy

OECD: Trump's Trade War Slows Down the Global Economy

Clothing Chain Applies for Bankruptcy Protection

Clothing Chain Applies for Bankruptcy Protection

Astra Zeneca makes multi-billion purchase

Astra Zeneca makes multi-billion purchase

The Stockholm Stock Exchange closed up

The Stockholm Stock Exchange closed up

These educations give you a job

These educations give you a job

Cheerful start on Asia's stock exchanges

Cheerful start on Asia's stock exchanges