Lower inflation than expected – and interest rate cuts in sight.
Several positive signals indicate that more people will get more in their wallets soon.
– Inflation is down to more normal levels and now we can talk about interest rate cuts, even if it may take six months, says Claes Hemberg, independent economist.
Inflation in November was lower than analysts expected, 3.6 percent (KPIF). This opens the door for the Riksbank to start lowering the policy rate next year.
– We are seeing a broad decline in inflation, says Claes Hemberg, economist.
In addition, US Federal Reserve Chairman Jerome Powell talked about three interest rate cuts next year at Wednesday night’s press conference.
Has the interest rate peaked?
Most things indicate that mortgage borrowers will face a downward spiral next year – the fixed mortgage rates have already begun to lower slightly after the positive inflation announcements.
– Already at the Riksbank’s February meeting, we can hear that they are starting to talk about reductions. You start by talking about it, then it takes time before you actually start lowering it.
At the last meeting, the Riksbank kept the policy rate unchanged at 4 percent.
– It will take a while before the interest rate comes down to what we see as more normal levels, in a year it may have been lowered to 3-3.5 percent, says Hemberg.
Purchasing power takes time to recover
Although the rate of price increase has slowed, it will take time before we regain the purchasing power lost during two years of inflation.
– The hundred patch we had two years ago, before inflation took off, is now only worth eighty kroner.
To regain purchasing power, wages must increase more than inflation.
– It takes years of wage increases to make up for this, says Hemberg.
The Stockholm Stock Exchange (OMX SPI) rose almost 3 percent on Thursday after the US central bank’s statement and the Swedish inflation statement.