(Bloomberg) -- Swedish unemployment was lower than expected in June, limiting the urgency of rate cuts to stimulate a sluggish economy.
The adjusted jobless rate remained at 8.2%, according to a statement from Statistics Sweden. Economists had estimated an increase to 8.5% and most forecasters expect unemployment to rise as the central bank’s key interest rate, currently at 3.75%, is holding back an economic recovery.
The recent employment data may make officials led by governor Erik Thedeen somewhat more cautious about easing, according to Nordea Bank Abp’s head of Swedish macro research, Susanne Spector. She still expects the Riksbank to cut rates by a full percentage point by the end of 2024, which is more than the central bank’s projection that it could reduce borrowing costs as many as three more times, to 3%, this year.
The Riksbank has cited a weak economic development and rising unemployment as factors that should contain price increases. A stronger than expected economy may be especially significant to the bank’s calculus if it comes amid Swedish currency weakness that increases concern of rising prices on imported goods. The krona has lost almost 4% of its value against the euro in the past month.
A rate cut in August remains “a done deal,” following a low inflation print for June, Spector said in a note to clients. “However, if the better outcome today is followed by more encouraging prints, then the weaker krona could pose some risks to our forecast of three additional rate cuts this year.”
--With assistance from Mark Evans.
©2024 Bloomberg L.P.
