Rising consumption, positive signals from households, a more stable labour market and a strong GDP forecast.
Growth in the Swedish economy has proved stronger than expected. Major bank Nordea warns in a report that this increases the risk that the Swedish Central Bank will raise the key interest rate as early as this year.
Fragile labour market
Amanda Sundström, fixed income strategist at SEB, believes in a different development.
The likelihood of an increase already this year is low, she tells TT.
With the stronger growth figures, we are indeed moving closer to an interest rate hike, she admits, but believes that the Swedish Central Bank wants to see a clearer improvement in the labour market before it makes more hawkish statements.
"So far, the labour market is weak and the improvement is fragile. I do not think the Swedish Central Bank feels stressed about the inflation risk at the moment," says Amanda Sundström.
Many economists have pointed out that strong purchasing power and the economy are partly fuelled by temporary tax breaks and subsidies. According to Sundström, the Swedish Central Bank is well aware of this situation.
Does not affect
The fact that the European Central Bank (ECB) is expected to raise interest rates this autumn is not a reason for the Swedish Central Bank to do so, says Amanda Sundström, even though the two central banks have historically moved in unison.
Previously, the economies in Sweden and the rest of Europe have been similar. Today, the Swedish inflation picture looks significantly better than in Europe, and the Swedish labour market is weaker than in many European countries, she says.
Although Nordea assesses the risk as clear for an interest rate increase already this year, both SEB and Nordea predict a first increase in the key rate only next year.
SBAB believes in an interest rate hike
However, the state mortgage bank SBAB believes in two interest rate hikes already this year, one in November and one in December, from the current 1.75 percent to 2.25 percent. One reason is that the probability of the Strait of Hormuz opening in September is now very low, according to Robert Boije, chief economist at SBAB.
We are approaching a limit where this should have greater effects on inflation, he says, but does not believe that the interest rate will be raised until the Swedish Central Bank has seen the inflation outcome over the next two months.
Corrected: In a previous version there was incorrect information about when Nordea sees a risk of an interest rate increase.
In the second quarter, GDP rose by 1.6 percent compared with the previous quarter, which was higher than expectations and the GDP indicator.
Adjusted for calendar reasons and compared with the second quarter of last year, growth was thus 3.3 percent.
Analysts' expectations averaged 2.5 percent growth compared with the second quarter of last year, according to Bloomberg.
There are also more positive sentiments among households. The household confidence indicator rose to 98.0, from 97.2.
Source: Statistics Sweden (SCB), Nordea, National Institute of Economic Research.
