We have lowered 75 points (0.75 percentage units) since May. We are lowering first among the Western economies, says Erik Thedéen.
I am opposing the narrative that we are not lowering quickly. We are lowering quickly, he adds.
Risk of having to backtrack
If the Swedish Central Bank moves too quickly, it entails risks, he warns.
If you do it too quickly in drastic steps, there is a risk that you will have to backtrack when reality does not turn out as you had thought.
The statement is made just over three weeks before the next interest rate decision from the Swedish Central Bank, which earlier this year lowered the interest rate three times, to 3.25 percent. In the interest rate decision on November 7, a fourth lowering is expected.
The November lowering is expected to be 25 points (0.25 percentage units), which is the Swedish Central Bank's normal interest rate step. However, some analysts believe it could be a so-called double lowering of 50 points.
According to Thedéen, it is leaning towards more lowerings, but how large they will be and when they will come cannot be said exactly. The ambition is to move step by step forward with lowerings – if the forecasts hold.
But we have also said that we do not rule out that we can do 50 points at one of these two occasions, he says about the situation ahead of the year's two last interest rate decisions.
"Significant uncertainty"
He does not want to answer whether his statements lately have been characterized by an ambition to lower expectations of a 50-point lowering in November.
I am not commenting on the November meeting. I was very careful about that now and I have been before too. What applies is what we said at the September meeting. We make a comprehensive assessment when we meet and are to make a decision at the beginning of November. Then we will weigh in the information that has come, he says.
During the questioning, Thedéen emphasized that the Swedish Central Bank's interest rate path – i.e. the forecast for the interest rate going forward – is not a promise.
There is still significant uncertainty.
Among other things, geopolitical developments – such as the Ukraine war, the Middle East conflict, or the US election – can affect inflation and make further lowerings unrealistic. The krona is another uncertainty factor, according to Thedéen.
The Swedish Central Bank presented, in connection with this year's third lowering of the interest rate to 3.25 percent in September, a new interest rate path that points to the interest rate being lowered to 2.25 percent around the middle of 2025. This is assumed to be an interest rate that neither stimulates nor restricts credit in the economy.
If the mortgage rate follows the interest rate down by 1 percentage unit, the interest cost for a mortgage of three million kronor would decrease by 30,000 kronor per year or 2,500 kronor per month, if one disregards the effects of interest deductions.
