STOCKHOLM, March 27 (Xinhua) -- The Swedish central bank announced on Wednesday that the benchmark interest rate will stay at 4 percent, suggesting a possible reduction in May.
The Riksbank said in a press release that although the risk of inflation becoming entrenched at an undesired level is declining, it needs further confirmation that inflation will stabilize around 2 percent before considering a rate cut.
"If the inflation prospects remain favorable, the policy rate may well be cut in May or June," the Riksbank said.
The decision to maintain the policy rate was largely expected by Swedish banks and analysts, but Wednesday's announcement was still interesting, Swedish Television's economy commentator Alexander Noren said, adding, "They have adjusted the trajectory downwards and forecast a greater cut than they previously did."
According to the Riksbank's updated forecast, a policy rate of 3.2 percent can be expected in the first quarter of 2025, instead of the 4.1 percent it previously forecast in November 2023.
As for 2026, the Riksbank expects a policy rate of 2.76 percent, revised from the 3.78 percent forecast in November.
"If the policy rate is lowered as predicted by the Riksbank, it will come as a great relief to many mortgage borrowers," Noren said as the policy rate had remained at or below zero for over seven years before the Riksbank started rate hikes in May 2022. ■
