After stable inflation figures and a strengthened krone recently, state-owned SBAB is sticking to its forecast of four interest rate cuts until the end of the year. It is believed that the Riksbank should accelerate further after the probable reduction next week.
“The manege is raked for four more reductions in the policy rate in the autumn,” says Robert Boije, chief economist at SBAB, in a press release.
Admittedly, there are risks that could disrupt future reductions, not least the geopolitical situation in the world.
“However, several factors suggest that the Riksbank should be able to lower the policy rate more this year than what they have said so far,” he comments further.
Double reduction justified
Based on the current state of the Swedish economy, SBAB believes that a double reduction of the key interest rate (0.5 percentage points) next week could be justified. However, it is not very likely.
“We do not believe that the Riksbank wants to jeopardize the recent strengthening of the krona. If the ECB lowers its key interest rate on September 12 and the Fed more clearly announces a reduction in the near term, the Riksbank can safely follow up the August reduction with a new reduction of 25 basis points in September and another two before the turn of the year,” says Robert Boije.