Pressurised mortgage holders can forget about an interest rate cut this week.
It may be delayed until autumn before the Riksbank cuts, predicts Handelsbanken.
When the Riksbank decided earlier this year to cut the repo rate for the first time in over eight years, it was long-awaited for many households that had seen housing costs skyrocket in recent years.
But ahead of Thursday's announcement from the Riksbank, expectations are low. From the Riksbank and Erik Thedéen's perspective, the communication has been clear: two further cuts are planned for 2024, but not until the second half of the year – in other words, not in June.
This despite the economic development now moving more and more in the right direction for the Riksbank.
Stronger Currency
One has received inflation figures that are in line with the Riksbank's prognosis and the krona has recovered after weakening following the interest rate decision in March, notes Claes Måhlén, chief strategist at Handelsbanken.
But if all these factors are in place, shouldn't the Riksbank take the opportunity and cut already in June?
No, I don't think you can say that. Inflation is still not at two per cent, the trend looks good but we still think there are question marks and we point to service prices, globally we also see that commodity prices have started to rise, says Måhlén and develops further:
This is a very different monetary policy cycle, the hikes have been faster than they have historically been, but the cuts will also be more gradual.
Not Until September
The overall picture means that Handelsbanken, unlike some other banks, now predicts that the next interest rate cut will occur in September and not in August.
Then you'll know a bit more about what both the Federal Reserve (the US central bank) and the European Central Bank (ECB) are doing, and you'll be in line with forecast updates, motivates Måhlén.
For someone sitting with high mortgage loans, every extra month with a repo rate at the current level, 3.75 per cent, can feel extra tough. But for the Swedish economy as a whole, it has less significance whether the cut occurs in August or in September, points out Claes Måhlén.
June is ruled out and not justified, I would think. August or September is more a matter of taste.
Corrected: In an earlier version, the wrong level for the repo rate was stated.
