Major Banks Disagree on Interest Rate Cuts

Nordea believes in two more interest rate cuts this year. Handelsbanken assesses that the Swedish Central Bank will be satisfied with one cut. This according to the banks' new economic reports.

» Published: January 22 2025

Major Banks Disagree on Interest Rate Cuts
Photo: Jonas Ekströmer/TT

Nordea paints a increasingly brighter picture for Swedish households, even though political uncertainty in several countries, including the USA, may have an impact on the Swedish economy as well. The assessment is a soft landing for Swedish households after a tough period.

The bank's assessment is that the Swedish Central Bank will now implement two more interest rate cuts before the summer, which would mean a repo rate of 2.00 percent.

If you look at the domestic economy, it's really weak and has been for a longer period, where households have played a crucial role. That's why we believe you need to get down to 2 percent to get more tangible consumption, says Nordea's chief economist Annika Winsth.

More cautious

Handelsbanken, on the other hand, is more cautious and believes in one more cut this year, then it's a stop. This is happening at the same time as the bank is lowering its forecast for Swedish growth and warning of the risk of a new inflation wave, even though the bank assesses that the Swedish economy is expected to recover this year.

Both banks, however, assess that households' purchasing power will strengthen during the year.

"We expect households to save a little more of their income than before the interest rate hike, but the strong income growth still provides room for a clear consumption increase this year," says Christina Nyman, according to a press release.

"Over the hump"

Nordea, in turn, sees that the Swedish economy has now come "over the hump" and, for example, unemployment will remain at 8.4 percent to decrease in the coming years.

When it comes to the housing market, both banks see clear signs of a recovery. Handelsbanken believes in a 6 percent increase in housing prices compared to last year, to then continue to rise in 2026-27.

Nordea, however, does not believe that prices will return to the same levels as in 2022-23, but will increase by 4.5 percent in 2025 and 3.5 percent in 2026.

Our assessment is that housing prices will rise approximately in line with disposable income. I think that's less than what many believe. Many have probably hoped that when we've had this weak market for a longer period, prices will rise more, says Winsth.

Tags

TTT
By TTThis article has been altered and translated by Sweden Herald

More news

Trump Extends TikTok Sale Deadline
1 MIN READ

Trump Extends TikTok Sale Deadline by 75 Days

Nintendo Delays Switch 2 Pre-Orders
1 MIN READ

Nintendo Delays Switch 2 Pre-Orders in US Over Tariff Concerns

Klarna Delays US Stock Listing
1 MIN READ

Klarna Delays US Stock Listing Citing Market Uncertainty

US Stock Market Tumbles 6
2 MIN READ

US Stock Market Tumbles 6 Percent as Tariff Concerns Rise

Trump Pressures Fed to Cut
2 MIN READ

Trump Pressures Fed to Cut Rates as Powell Stands Firm on Inflation

US Job Growth Surpasses Expectations
1 MIN READ

US Job Growth Surpasses Expectations with 228,000 New Positions

Busch Urges Swedish Firms to
2 MIN READ

Busch Urges Swedish Firms to Stay Local Amid US Trade Uncertainty

Minister Warns of Global Trade
1 MIN READ

Minister Warns of Global Trade Impact as China Hits Back at US Tariffs

China Hits Back with 34%
2 MIN READ

China Hits Back with 34% Tariffs on US Goods, Files WTO Complaint

Ica Bank Cuts Mortgage Rate
1 MIN READ

Ica Bank Cuts Mortgage Rate to 3.68 Percent

Zuckerberg's Wealth Drops by 177
1 MIN READ

Zuckerberg's Wealth Drops by 177 Billion Kronor in Stock Market Slide

Sweden's New Trade Deal Boosts
1 MIN READ

Sweden's New Trade Deal Boosts Pay and Cuts Working Hours

Police Warn of Crime Surge
1 MIN READ

Police Warn of Crime Surge Risk Following Northvolt Bankruptcy

Cristina Stenbeck Returns as Kinnevik
1 MIN READ

Cristina Stenbeck Returns as Kinnevik Chairman After 7 Years

China's Tariffs Shake Stockholm Stock
2 MIN READ

China's Tariffs Shake Stockholm Stock Exchange, Expert Warns of Escalation

Stock Market Sees Largest Single-Day
1 MIN READ

Stock Market Sees Largest Single-Day Drop Since 2020 Pandemic

Sweden's Inflation Falls More Than
2 MIN READ

Sweden's Inflation Falls More Than Expected, Offering Economic Relief

Transport Unions and Employers Seal
1 MIN READ

Transport Unions and Employers Seal New Wage Agreement

Stockholm Stock Exchange Drops 4.2
2 MIN READ

Stockholm Stock Exchange Drops 4.2 Percent Amid Global Market Slump

EU Tariffs on US Goods
3 MIN READ

EU Tariffs on US Goods Could Raise Prices for Swedish Shoppers

Asian Markets Slide Following US
1 MIN READ

Asian Markets Slide Following US Tariff Announcement

IMF Warns US Tariffs Threaten
1 MIN READ

IMF Warns US Tariffs Threaten Global Economic Growth

Trump Signals Openness to Tariff
1 MIN READ

Trump Signals Openness to Tariff Negotiations for Economic Boost

EU Prepares Trade Countermeasures as
3 MIN READ

EU Prepares Trade Countermeasures as US Tariffs Loom

WTO Warns Trump's Tariffs Could
1 MIN READ

WTO Warns Trump's Tariffs Could Cut Global Trade by 1 Percent

Canada Imposes 25-Percent Tariffs on
1 MIN READ

Canada Imposes 25-Percent Tariffs on US Cars in Trade Dispute

Macron Urges EU Firms to
1 MIN READ

Macron Urges EU Firms to Rethink US Investments Over Tariffs

Volvo's Shift to Electric Cars
2 MIN READ

Volvo's Shift to Electric Cars Faces Scrutiny as Diesel Demand Persists

Stellantis Halts Canada and Mexico
1 MIN READ

Stellantis Halts Canada and Mexico Production Over US Tariffs

Fitch Downgrades China's Credit Rating
1 MIN READ

Fitch Downgrades China's Credit Rating Citing Economic Concerns

Wind Farm Cable Approval Granted
2 MIN READ

Wind Farm Cable Approval Granted but Vattenfall Faces Cost Hurdle

US Stock Market Tumbles as
3 MIN READ

US Stock Market Tumbles as Tariffs Hit Tech Giants

US Tariffs Pose Global Economic
2 MIN READ

US Tariffs Pose Global Economic Challenge, Says Swedish Central Bank Chief

Ikano Bank Faces Police Report
1 MIN READ

Ikano Bank Faces Police Report in Denmark Over Misleading Marketing

EU Trade Chief Sefcovic to
1 MIN READ

EU Trade Chief Sefcovic to Discuss US Tariffs on Friday

Volvo Cars Boosts US Production
3 MIN READ

Volvo Cars Boosts US Production in Response to Trump's Tariffs

US Imposes Tariffs on Remote
1 MIN READ

US Imposes Tariffs on Remote Penguin Islands in Australian Territory

Saab Secures Major Order for
1 MIN READ

Saab Secures Major Order for Combat Vehicle Systems from BAE Systems

Trump Tariffs Threaten to Hike
1 MIN READ

Trump Tariffs Threaten to Hike Coffee Prices in the US

Trump's New Tariffs Spark Global
2 MIN READ

Trump's New Tariffs Spark Global Criticism and Economic Concerns