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The Market is Doubtful About Two Interest Rate Cuts This Year

The probability of the Swedish Central Bank lowering the interest rate twice this year has clearly decreased, according to a report from the major bank SEB. A decrease – of 0.25 percentage points to 2.25 percent – is, however, essentially priced in at 100 percent. It is expected to come in January or March.

» Published: 07 January 2025

The Market is Doubtful About Two Interest Rate Cuts This Year
Photo: Claudio Bresciani/TT

The interest rate market has since the Swedish Central Bank's last interest rate announcement on December 19 taken an increasingly hesitant position regarding the second rate cut in 2025. This cut was initially in early December last year, with a wide margin, fully priced into the interest rate traders' positions.

However, the probability of this year's second rate cut has now fallen to 52 percent.

In early December last year, the pricing also indicated a third rate cut this year, with a probability of as much as 72 percent. However, this cut is currently not something the market is counting on at all.

The next interest rate announcement from the Swedish Central Bank, whose own forecasts in its so-called interest rate path are in line with the prevailing pricing on the market, will come on January 29.

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By TTThis article has been altered and translated by Sweden Herald

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