"The prospects for a rapid recovery in the Swedish economy are further clouded by global uncertainty and tariffs that will hit Swedish exports. Moreover, we see a weaker inflation pressure. Overall, this means that the Swedish Central Bank will need to act," writes Andreas Wallström in a press release.
At least one reduction to
Swedbank's economists have, as a result of the development, revised their forecast that Swedish GDP growth this year will remain at 1.5 percent and that the Swedish Central Bank will lower the interest rate.
"At least one more time, to 2 percent," writes Wallström.
Previously, Swedbank's economists expected the Swedish Central Bank to be finished with its interest rate cuts for the year after the interest rate cut to 2.25 percent in January and that growth this year would be around 2 percent.
A consequence of the development is that the variable mortgage rates will fall somewhat more this year compared to the previous forecast, to an average of 3.1 percent, according to Swedbank's economists.
Rapid turnaround on the interest rate market
The interest rate market has also seen a rapid turnaround when it comes to the Swedish Central Bank's interest rate. In pricing, the probability of a reduction to this year is now over 100 percent, according to a report from the major bank SEB's economists. This can be compared to the market just a week ago expecting the next interest rate decision to be an increase.
The Swedish Central Bank's board presented, in connection with the latest interest rate decision on March 20, a so-called interest rate path – i.e. a forecast for the interest rate – which remained flat at 2.25 percent in interest rate until the first quarter of 2028.
The interest rate sets the tone for the entire economy, but particularly affects variable mortgage rates. If the mortgage rate were to be lowered by 0.25 percentage points, it would reduce the interest cost for a three million kronor mortgage by 7,500 kronor per year or 625 kronor per month – if one disregards the effects of interest deductions.
