SEB strategist Amanda Sundström does not see the hike that the market has begun to speculate about as particularly likely. Not as long as everything continues to point towards two or three interest rate cuts by the European Central Bank (ECB) and the US Federal Reserve (Fed) before the turn of the year.
I think it's unlikely that the Swedish Central Bank would raise the interest rate when the Fed and ECB are cutting it. I have a hard time seeing that development, she says.
Unchanged interest rate main scenario
The Swedish Central Bank, as expected, left the repo rate unchanged at 2.25 per cent in its announcement last week. The Governor of the Swedish Central Bank, Erik Thedéen, then described the risks of an interest rate hike or cut as equally large. And the Swedish Central Bank's main scenario is an unchanged repo rate throughout the entire forecast period, until the beginning of 2028.
The shift in market positioning regarding the likelihood of an interest rate hike is connected to unexpectedly high inflation in Sweden at the beginning of the year and the fact that many see a risk that the trade war initiated by US President Donald Trump will create global inflation problems.
Pulls along floating mortgage rates
The pricing on the interest rate market now gives a probability of an interest rate hike of 0.25 percentage points to 2.50 per cent during the year of 40 per cent. This can be compared to a probability of 4 per cent before last week's interest rate announcement from the Swedish Central Bank.
One month ago, the pricing pointed in the opposite direction. Then, the probability of an interest rate cut to 2.00 per cent during the year was over 50 per cent.
The repo rate affects the entire economy's interest rate situation and usually pulls along floating mortgage rates both upwards and downwards. If the interest rate on a three million kronor mortgage were to be increased by 0.25 percentage points, the interest cost for the loan would increase by 7,500 kronor per year, disregarding the effects of interest deductions.
