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The crown crisis does not appear to be as deep and prolonged as the Riksbank previously expected, if we look at key figures such as GDP and inflation.
– The Riksbank will highlight that it looks less bad, but that great uncertainty remains, says SEB economist Olle Holmgren before the interest rate announcement.
Staying at zero until 2023
The consensus among experts is that the Riksbank’s forecast for the policy rate remains at zero, until the third quarter of 2023.
At the same time, the ranks of forecasters have raised their GDP forecasts for Sweden recently. Nordea chief analyst Torbjörn Isaksson acknowledges that the Riksbank is now holding up.
– We think it’s quite significant, he says.
The support buying program, despite the unexpectedly positive development, is expected to run as planned until summer 2021. But Isaksson believes that the Riksbank will soon have to start dealing with sharp price increases and growth in the credit in the housing market, perhaps stifling support purchases next year. mortgage bonds.
– They are a kind of support for the housing market, which is already fashionable, he says.
Even controversial corporate bond backing takeovers can smoke, according to Isaksson.
“Risk of interest rate cut”
The Norwegian central bank has started to signal interest rate hikes. But it is not relevant in Sweden for the foreseeable future, believes Isaksson. This is partly due to the fact that the Riksbank has so far, despite the crown crisis, refrained from lowering the policy rate from zero to where it rose in December 2019.
Stefan Ingves and his management even earlier during the crisis pointed out that it may be necessary to cut interest rates when the crisis of the crown has subsided, to accelerate the recovery.
– There is still the risk of interest rate cuts. Not tomorrow and maybe not in December. But it’s still in the prospects. We’ll look for signs around that, Isaksson says.
The government budget, presented on Monday, includes in the forecasts a reduction of the policy rate to minus 0.5% by 2023. However, it is a technical budgetary assumption that reflects the scope of the stimuli, which they can also come from fiscal policy 2022-2023.
– Or the Riksbank leaves the interest rate at zero for the foreseeable future, which is our forecast. But if they presumably go down in the future, it will likely be less than 0.5 percent in that case, Isaksson says.
Joakim Goksör / TT
According to the CPIF measure, inflation in August was 0.7 percent in August. The Riksbank’s target is 2 percent. Adjusted for energy prices, inflation was 1.4 percent, one tenth more than the Riksbank’s forecast.
The unexpectedly rapid recovery that the Swedish economy is experiencing began as early as June, according to a so-called activity indicator from Statistics Sweden.
In June, growth was estimated to be 4 percent compared to the previous month, followed by 3.2 percent growth in July.
In April, when the crown crisis hit the Swedish economy in full force, GDP fell 7.1 percent compared to the previous month.
| Month | GDP percentage growth * |
| January | +, 1.6 |
| February | –1.4 |
| Mars | –1.7 |
| April | –7.1 |
| May | –2.7 |
| June | +4.0 |
| July | +3.2 |
* The activity indicator illuminates the overall activity of the Swedish economy in a similar way to the description of growth provided by GDP. It is based on a much smaller base than the GDP calculations, and therefore has lower reliability.
Source: Statistics Sweden
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