Riksbank's Interest Rates: Expert Predictions Amid Economic Uncertainties
Experts divide on Riksbank's interest rate outlook as economy shows mixed signals.
Key Points
- • Riksbank's interest rate stays at 2%; potential for a rate cut is under debate.
- • Robert Bergqvist predicts a drop to 1.75% in September due to economic sluggishness.
- • Annika Winsth warns high inflation may prevent any rate cuts despite economic challenges.
- • The government's budget includes a surprising 80 billion SEK reform space, raising inflation concerns.
As of August 29, 2025, the Riksbank's key interest rate remains unchanged at 2%, continuing its stance after the latest board meeting. However, experts are split on whether the central bank will lower this rate in the near future, amidst a backdrop of sluggish economic growth and persistent inflation.
Robert Bergqvist, a senior economist at SEB, has forecasted a potential rate cut to 1.75% as early as September, driven by concerns over a lackluster economy, which saw only a 0.5% GDP growth in the second quarter—slightly below analysts' expectations. In contrast, Annika Winsth, chief economist at Nordea, argues that ongoing inflation, currently above 3%, might impede any rate reductions despite economic weaknesses. She emphasizes that the government’s unexpected budget, highlighting a reform space of 80 billion SEK, could increase inflationary pressures, complicating the Riksbank's decisions on interest rates.
The situation presents a complex interplay of fiscal policies and economic indicators impacting Sweden’s monetary policy landscape, with the next Riksbank meetings expected to be pivotal in determining the direction of interest rates.