(Bloomberg) -- Sweden’s largest bank expects the Riksbank to take a more cautious approach to monetary policy easing following the recent weakening of the krona. 

The Swedish currency has lost about 4% of its value against the euro this year, and the central bank has highlighted a decline as a risk that could jeopardize a steady march toward lower inflation rates in the Nordic region’s largest economy. 

While SEB AB still believes the Riksbank will lower its benchmark rate to 3.75% from 4% next month, a second cut in June has become less likely as the krona is trading below the Riksbank’s forecasts, the bank’s strategists said in a note on Monday.  

“We are therefore postponing our forecast for the second rate cut to August,” Olle Holmgren and Amanda Sundstrom said. “The board is likely to repeat the message that risks to inflation returning to target remain, particularly from the weak exchange rate.”

SEB still expects four rate cuts this year, taking the benchmark rate to 3% by the end of 2024, after inflation was clearly below the Riksbank’s forecasts in March.  

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