Central banks of Sweden and Norway prepare to lower rates

Experts from Nordea Bank Abp predict the completion of the current cycle of monetary policy easing by the central banks of Sweden and Norway over the next six months. This development is attributed to the expected revival of domestic demand in the Scandinavian countries.

Riksbank in Sweden and Norges Bank in Norway are projected to reach their target rates by mid-summer, setting them at 2% and 4%, respectively. These indicators suggest a decrease of 50 basis points relative to current values, which is reflected in the latest economic forecast of the key financial institution of Northern Europe, published on Wednesday.

The forecasts for Sweden proposed by Nordea completely coincide with the consensus opinion of economists. Previously, the bank assumed that the level of the Riksbank key rate would reach 2% by the end of the year.

At the same time, Nordea's assessment of Norway differs markedly from the median forecasts. According to the latest data, Norges Bank's key interest rate is expected to gradually decrease to 2.9% over the next year.

For comparison, in the September forecast, Nordea experts assumed three consecutive rate cuts of 0.25 points, which could lead to a decrease in the level to 3.75% by the end of next year.