Nordea has previously stood out among major banks with a forecast that the Swedish Central Bank would wait before lowering the interest rate. But now the forecast is a rate cut of 0.25 percentage points to 2.00 percent next week.
The Swedish Central Bank has recently made a clear turn in its monetary policy towards a lower interest rate, despite inflation being far above target, reasons Annika Winsth. Now the GDP has also shown up worse than expected and the inflation figure was slightly lower than what the Swedish Central Bank had in its forecast.
“The Swedish Central Bank should have lowered much earlier”
Personally, Winsth believes that the economic downturn was reached already in the second quarter last year.
The Swedish Central Bank should have lowered the interest rate much earlier, already a year ago, to get the economy going, she says.
The GDP figures that she believes are guiding the Swedish Central Bank towards a rate cut right now are not as bad as they seem, according to Winsth.
Looking at them in detail, it's mostly volatile parts such as energy and food that are pulling down GDP, she says.
She adds that households and companies are waiting and seeing in the uncertainty that still prevails, and therefore one should expect a slow recovery.
“You should be humble”
If next week's forecasted rate cut is the Swedish Central Bank's last for this year, she dares not say.
We have no more rate cuts in our forecast. But you should be very humble.
New developments can make people uncertain again, according to Winsth, and she believes that Trump's tariffs can drive up inflation.
It can bounce back up again. That's why I think it would have been best to wait with the rate cut. If I had sat in the board of directors, I would not have lowered the interest rate now, she says.
