The Large Bank Believes in a Faster Pace in the Economy

Handelsbanken raises its forecast for Swedish growth this year to 0.9 percent, up from previously 0.4 percent. Increased purchasing power for households, interest rate cuts, and an expansionary fiscal policy are driving the development, they believe.

» Published: September 11 2024

The Large Bank Believes in a Faster Pace in the Economy
Photo: AP/TT

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The Swedish Central Bank is expected to lower the interest rate to 2.75 percent in December and follow up with two more reductions to 2.25 percent during the first half of 2025, according to Handelsbanken's economists.

The US central bank, Federal Reserve (Fed), is also expected to lower.

"We expect central banks to bring forward interest rate cuts and thereby secure a soft landing, with increasing demand from households as the decisive driving force", the economists write.

The "soft landing" central banks are aiming for is not a given, they warn. They see several factors remaining that could trigger a negative spiral.

Among the clouds of concern, they point out global trade tensions, the Middle East conflict, and the US presidential election on November 4, which could change the situation:

"Uncertainty about the US fiscal policy after the presidential election creates risks".

The bank is revising its GDP forecast for 2025 down to 2.5 percent, from previously 2.8 percent. But they are raising their 2026 forecast to 2.7 percent, up from 2.4 percent.

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By TTEnglish edition by Sweden Herald, adapted for local and international readers

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