Market Divided Over Upcoming Riksbank Interest Rate Decision
Investors are split on the Riksbank's upcoming interest rate decision as uncertainties and economic indicators vary widely.
- • Two-thirds expect unchanged interest rates, but many anticipate cuts by November.
- • Weak labor market could support a rate cut, despite a recovering economy.
- • Riksbank's decision to be accompanied by new economic forecasts.
- • Global central banks influence expectations for Swedish monetary policy.
Key details
As the Riksbank approaches its crucial interest rate decision on September 23, expectations remain highly uncertain among investors. According to a recent survey by SEB, about two-thirds of large Swedish interest investors predict that the Riksbank will keep interest rates unchanged at the imminent meeting. Nonetheless, an equally significant number foresees at least one rate cut by November, with 20% believing that no cuts will happen this year.
Riksbank Governor Erik Thedéen has acknowledged the conflicting signals, stating that market expectations are the most divided he has seen since he assumed office over two years ago. This schism is compounded by varying economic indicators; for instance, while Nordea anticipates improvements in the economy and consumer confidence, suggesting that further rate cuts might be unnecessary, Handelsbanken points to persistent weaknesses in the labor market, with unemployment stagnating at 8.7% for the ninth consecutive month.
The upcoming decision coincides with a broader context of easing monetary policies from central banks globally, including the Federal Reserve, which has recently reduced rates for the first time since December. The influence of these international moves, along with the Norwegian central bank's slow adjustment pace, further shapes market perceptions.
In contrast, figures from Di's Shadow Directorate, including economists like Lena Sellgren and Pär Österholm, are discussing the possibility of a rate cut or maintaining the current rates; however, their findings and arguments are not fully detailed. This ongoing debate highlights the critical nature of the Riksbank's choice, as it will also introduce new economic forecasts alongside the rate decision on September 23, with additional meetings scheduled for November 5 and December 18.