(Bloomberg) -- Economists are becoming increasingly optimistic about Sweden’s growth prospects, and expect the Riksbank to lower its benchmark interest rate by a full percentage point by the end of March 2025, according to a survey.
According to forecasts compiled by Bloomberg, the largest Nordic economy is set to grow 0.7% this year, up from 0.5% in a last month’s survey and 0.2% forecast in May.
The shift comes as Swedish inflation is subsiding and the central bank has initiated what it expects will be a string of rate cuts. That could buoy consumers that have cut back on spending as borrowing costs rise, helping the economy return to growth after being largely stagnant through last year.
Following a June reading that showed price increases were clearly lower than the Riksbank’s 2% target, economists in the survey now expect the key rate 100 basis points lower at 2.75% by the end of March next year. In the previous survey, their expectation was for a policy rate of 3%.
The Riksbank has scheduled two rate-setting meetings in the third quarter, and a narrow majority of 52% believe policymakers will opt for a 25 basis-point cut in either August or September, while the rest project two cuts in the current three-month period.
©2024 Bloomberg L.P.
