Inflation, calculated according to the Riksbank’s measure CPIF (excluding interest rate effects), is predicted to land almost squarely on the inflation target of 2 percent in December. Several of the big banks’ economists are predicting this before Statistics Sweden (SCB) releases price figures for December.
– We believe that CPIF will fall significantly, to 2.1 percent, says Olle Holmgren, interest rate expert at SEB.
The assessments of the other major banks are also roughly there, and this means that the annual rate of price increase falls from 3.6 percent in November. Lower electricity prices compared to the price shock in December 2022 is an important explanation for the fall in inflation in December.
Great achievement
Runaway interest costs for households mean that the pure measure of inflation, the CPI, will, however, remain at a higher level. It is estimated to land at 4.2 percent in December, according to a compilation of forecasts from Bloomberg, down from 5.8 percent the month before.
The interest rate peak has been reached, even the Riksbank management has more or less confirmed it – now it’s all about how quickly and how much the key interest rate should be lowered and thereby pressure the variable mortgage rates. And the direction is for the interest rate cut to come closer with each new update made by various economists.
– In our current forecast, we have a first reduction in June. We are considering whether to move it even closer in time, and then to May, says Olle Holmgren, interest rate expert at SEB.
Many reductions
A further series of reductions is then expected. Nordea recently made a similar revision to its interest rate forecast – a first rate cut from the Riksbank will come in May, then there will be five more cuts to 2.50 percent before the end of the year. Handelsbanken’s economists are so far somewhat more cautious.
The Riksbank management has so far resisted, if nothing else so that households and companies will not take out the reductions in advance and start burning the economy. In its interest rate forecast, there is no cut until 2025, even though they themselves stated that that forecast probably won’t hold up.