"About 50/50 until the end of the year whether there will be a hike or not. Those are pretty round numbers, but there is a somewhat inflated expectation of an increase compared with before," says Riksbank Governor Erik Thedéen.
The announcement comes despite the fact that oil prices have clearly fallen in the past week.
Basically, it's positive. If it were to keep falling and become permanent, if we get a more functioning oil market, then it's basically positive for the world economy and for Sweden. But we're not there yet.
An increase would mean higher interest costs for households with mortgages, but Thedéen is not too worried.
It has been shown that Swedish mortgage borrowers have managed quite well and that is very good. We had a policy rate of 4 percent, which meant mortgage rates of 5–5.5 percent, and households managed that. We had very, very few bankruptcies in the household sector.
Have margins
At the same time, he believes that households would then have to reduce their consumption and savings.
It's good that households have margins for higher interest rates. That margin shouldn't be changed depending on what I or anyone else says at these press conferences, but you should simply have a good margin in your loan portfolio.
The announcement of an unchanged interest rate was expected by analysts. The Swedish Central Bank's slight increase in its inflation forecast, and thus the higher likelihood of an interest rate hike later this year, was also expected.
No drama
But there is no drama in the announcement, according to Torbjörn Isaksson, chief analyst at Nordea.
"We stand by the Swedish Central Bank's decision to leave the interest rate unchanged this year."
If there is an increase, it will only come in the latter part of the year, he predicts.
There is no strong signal of an interest rate hike at the August meeting, nor in September, says Isaksson.
Jens Magnusson, chief economist at SEB, has long forecast that the key interest rate will not be raised until December 2027.
The underlying inflationary pressure is so low that the Swedish Central Bank may be able to keep the interest rate unchanged for a long time, he says.
