Major Bank: Mistake Not to Cut Interest Rate Now

It will not be an interest rate cut on Thursday, according to some of the country's gathered experts. But Mattias Persson, chief economist at Swedbank, believes it will be seen as a mistake in hindsight. It should be an alternative, he says about a cut.

» Updated:

» Published:

Major Bank: Mistake Not to Cut Interest Rate Now
Photo: Anders Wiklund/TT

Share this article

There will be no interest rate cut on Thursday, according to some of the country's gathered experts.

But Mattias Persson, chief economist at Swedbank, believes it will be seen as a mistake in hindsight.

It should be an alternative, he says about a cut.

Prior to the Riksbank's new interest rate announcement on Thursday, the chief economists at SBAB, Länsförsäkringar, Swedbank, Handelsbanken, SEB, and Danske Bank agree that the interest rate will remain unchanged. They say so at an appearance during the Politics Week in Visby.

Alexandra Stråberg at Länsförsäkringar believes there is no reason for the Riksbank to surprise.

Rather "under-surprise", or make it as undramatic as possible. The only reason to surprise would have been if the macro picture had changed dramatically, and it hasn't, she says.

Mattias Persson at Swedbank, however, believes it will be seen as a mistake in hindsight not to cut now.

It should have been an alternative, which you completely shut the door on. But looking at the data and our forecasts, it shouldn't be entirely ruled out, he says.

Maybe August

He doesn't expect any major changes in the interest rate path either.

Which is a shame, I think. There will be small changes, but hopefully an opening for the next cut to be in August or September.

Christina Nyman at Handelsbanken, however, raises a warning finger for inflation.

Start a Trade War

The Finance Minister says the inflation battle is won. I absolutely believe we have the worst inflation, the really troublesome one, behind us. But I'm not as sure that it's stably down and that we can therefore cut interest rates as much as we want, she says.

Some warning signals on the horizon for inflation are, according to the chief economists, high national debts in countries like France and the USA, and if Donald Trump becomes president and makes good on his promises of various taxes and tariffs on Chinese goods.

It's a perfect way to start a trade war that can escalate and be inflation-driven, says Alexandra Stråberg.

Despite this, she is optimistic about 2025.

Then we'll be standing here and be really happy.

The interest rate will come down, inflation will have come down, and the labour market will be doing better. It's crucial for how people feel and whether they can manage their daily economy, she says.

Tags

Author

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

More news

USA Welcomes Foreign Workers Amid Investment Concerns

USA Welcomes Foreign Workers Amid Investment Concerns

Government Boosts Support for Sweden's Regional Airports

Government Boosts Support for Sweden's Regional Airports

Klarna CEO: Embracing "Swedishness" as a Key Asset

Klarna CEO: Embracing "Swedishness" as a Key Asset

Handelsbanken Swish Payment Disruption Resolved

Handelsbanken Swish Payment Disruption Resolved

Government Proposes Increased Export Credit Guarantees for Swedish Companies

Government Proposes Increased Export Credit Guarantees for Swedish Companies

AstraZeneca Halts UK Research Facility Expansion Plans

AstraZeneca Halts UK Research Facility Expansion Plans

Princess Madeleine's Skincare Brand Launch Draws Lukewarm Interest

Princess Madeleine's Skincare Brand Launch Draws Lukewarm Interest

Länsförsäkringar Swish Payment Issue Resolved

Länsförsäkringar Swish Payment Issue Resolved

Blind Box Trend Raises Concerns Over Consumer Behavior and Spending

Blind Box Trend Raises Concerns Over Consumer Behavior and Spending

France's Credit Rating Downgraded by Fitch

France's Credit Rating Downgraded by Fitch

Microsoft Gains Amid Mixed US Market

Microsoft Gains Amid Mixed US Market

FTC Investigates Google and Amazon Over Advertising Practices

FTC Investigates Google and Amazon Over Advertising Practices

US Proposes G7 Tariffs on China and India Over Russian Oil Purchases

US Proposes G7 Tariffs on China and India Over Russian Oil Purchases

Taco Bell Plans Expansion into Sweden with First Stockholm Location

Taco Bell Plans Expansion into Sweden with First Stockholm Location

Russia's Central Bank Makes Smaller Than Expected Interest Rate Cut

Russia's Central Bank Makes Smaller Than Expected Interest Rate Cut

ECB Officials Divided on Future Interest Rate Decisions

ECB Officials Divided on Future Interest Rate Decisions

Klarna CEO Secures Billion-Kronor Loan to Buy Out Co-Owner

Klarna CEO Secures Billion-Kronor Loan to Buy Out Co-Owner

Six Suspects in Consultant Scandal Face Charges After Spain Raid

Six Suspects in Consultant Scandal Face Charges After Spain Raid

Microsoft to Remove Teams from Office Package in EU Agreement

Microsoft to Remove Teams from Office Package in EU Agreement

UK Economy Growth Stagnant in July as GDP Remains Unchanged

UK Economy Growth Stagnant in July as GDP Remains Unchanged