None of the five major banks any longer believes in any rate cut this summer. The Riksbank lowered the policy rate last spring to 3.75 percent, and it was then predicted that the next reduction could occur at the end of June in connection with the Riksbank’s monetary policy meeting.
Inflation higher than the target
But inflation remains above the 2 percent target. At the time of writing, the latest inflation figures are 2.3 percent in May, which could be an argument for continuing to maintain the high key interest rates.
What does a Riksbank do?
A high key interest rate is the only weapon the Riksbank has to puncture inflation.
When interest rates are high, consumption decreases, which in turn dampens price increases.
Winsth: “Lower the policy rate”
Annika Winsth is chief economist at Nordea and has for several months propagated to lower the policy rate as soon as possible.
– If you only look at domestic data for the Swedish economy, then you should lower the interest rate, says Annika Winsth to Sveriges Radio Echo.
It won’t do anything
But it seems there will be none of that on Thursday. Instead, the big banks believe that the interest rate cut will be delayed until August, when the next monetary policy meeting is held. Or even until September.
Underlying inflation even higher
Also Matthias Perssonchief economist at Swedbank, thinks he sees arguments for the Riksbank not daring to lower the interest rate on Thursday.
– If you look at underlying inflation, what we usually call CPIF without energy, it is at 3 percent and that is a bit high for the Riksbank to feel completely confident that inflation is fully under control, he tells Ekot.
On the other hand, the banks believe in more reductions during the year than what the Riksbank themselves say.
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