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SWEDEN: NIER Forecast 3 More Riksbank Cuts In 2024

SWEDEN

Swedish think tank NIER has maintained its forecast for 3 additional Riksbank cuts in 2024, bringing the policy rate to 3.00% by year-end. This is slightly more dovish than current Riksbank guidance, which notes that “if inflation prospects remain the same, the policy rate can be cut two or three times during the second half of the year”.

  • A 25bp rate cut is widely expected to be delivered on August 20. The Riksbank may also use this meeting to communicate a 3.00% year-end policy rate as the base case (i.e. consistent with three rather than two rate cuts in H2 2024), particularly if July inflation (due August 14) remains below the June MPR forecasts.
  • The likelihood of a Fed interest rate cut in September also provides the Riksbank more room for domestic policy easing.
  • NIER expect three additional rate cuts in 2025 as well, bringing the policy rate to 2.25%. CPIF is projected to be below the 2% target at the end of 2024 and 2025, underpinning expectations for consistent rate cuts. 
  • NIER revised its 2024 GDP forecast 2 tenths lower to 0.7% Y/Y, while 2025 growth was once again forecast at 2.2%. 
  • Full details (in Swedish) here: https://www.konj.se/publikationer/konjunkturlaget/konjunkturlaget/2024-08-07-konjunkturbilden-bestar.html

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