Swedes ponder potential hike in interest rate due to recent inflation data
Swedbank's Chief Economist Mattias Persson has forecasted two interest rate cuts this autumn, a prediction that has sparked a lively debate among analysts.
Persson's prediction comes as inflation, as measured by CPIF, rose from 3% in July to 3.3% in August. Despite this increase, the figure remains above the 2% target set by the central bank. The official inflation figures for August will be released later this month.
Torbjörn Isaksson, head analyst at Nordea, shares Persson's optimism, stating that the chance of a key interest rate cut in September has increased. Alexandra Stråberg, Chief Economist at Länsförsäkringar, predicts a key interest rate cut in November.
High bank interest rates make borrowing money expensive, which can lead to less spending and lower inflation. Persson believes the underlying inflation figure shows that the rate at which prices are increasing is slowing down. If his prediction is correct, he expects the Riksbank to cut the key interest rate in September and November.
However, Stråberg argues that the current interest rate is too high for kickstarting the Swedish economy. She believes August's inflation figures have put the Riksbank in a difficult situation. The policy rate, the main monetary policy tool of the central bank, could be affected by these decisions.
CPIF-XE inflation, or CPIF inflation with energy prices removed, fell from 3.2% in July to 2.9% in August. This figure is an important one that the Riksbank considers when deciding whether to change the key interest rate. The difference between the actual inflation figure and the bank's predicted inflation rate has dropped.
Per Jansson, deputy head of the Swedish central bank, stated that high inflation levels seen during the summer might be temporary. His comments suggest that the Riksbank may be cautious in its decision-making process.
As the Riksbank prepares to announce its decision, the predictions of Persson, Isaksson, Stråberg, and others will be closely watched. The potential interest rate cuts could have significant implications for the Swedish economy, affecting everything from borrowing costs to consumer spending.
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