(Bloomberg) -- Sweden’s central bank is likely to take interest rates lower at a faster pace than previously anticipated, according to economists surveyed by Bloomberg.
Respondents now expect a benchmark rate of 2.25% at the end of the first quarter of 2025, down from 2.50% in last month’s survey. The change comes as price increases in Sweden are lower than the Riksbank’s 2% target, and policymakers have flagged a risk of inflation becoming too low.
The Swedish central bank has already lowered borrowing costs three times this year, to 3.25%. Investors are currently trying to figure out whether it will make do with another couple of quarter-point cuts before the year-end, or if officials will opt for a larger increase to aid a listless Swedish economy.
Market pricing currently indicates that policymakers led by Governor Erik Thedeen will cut rates by half a percentage point either in November or December. Even so, a majority of economists surveyed see them opting for a steady pace, with quarter-point cuts at each meeting scheduled through the end of the first quarter of next year.
Either way, lower borrowing costs, combined with increased public spending, are expected to spur a pickup in domestic activity as real wages recover lost ground from the past years of high inflation.
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