Wells Fargo Predicts Swedish Central Bank Will Pause Rate Cuts, but Further Reductions Likely in 2024

Wells Fargo has projected that the Swedish central bank will maintain its current interest rates, pausing at 3.75% in the upcoming week. This pause comes after a series of 25 basis points rate cuts initiated in early May. Market participants are keenly observing the Swedish central bank's economic forecasts, hoping to glean insights into future policy rate movements.

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Wells Fargo forecasts a total of three additional rate cuts throughout 2024, each being 25 basis points. This sheds light on the bank's expectations that the Swedish economic conditions will necessitate further rate adjustments to sustain growth and mitigate inflation.

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A pause is anticipated in June, allowing the central bank to assess the economic impact of prior cuts.

Another 25 basis point reduction is projected for the third quarter of 2024, as inflation moves closer to the target range.

As inflation trends towards the central bank’s target, Wells Fargo anticipates two additional 25 basis point cuts in the fourth quarter.

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