Sweden may not need to raise rates again, Riksbank governor says

OSLO (Reuters) -Sweden has seen several positive developments regarding inflation both at home and abroad since the end of November, and may not need to raise rates again, Riksbank Governor Erik Thedeen said on Wednesday.

At its most recent meeting in November, the central bank kept its policy rate on hold at 4.00% after eight rate hikes in a row, but said it was ready to hike again if inflation proved stubborn.

However, a bigger than expected drop in inflation in November and a stronger crown point to a brighter inflation outlook, Thedeen said.

“We think that we can reach the inflation target without further rate hikes,” he told reporters.

Forecasts could still be wrong, he said earlier in a speech, striking a note of caution.

“It is therefore still important to follow developments to see how they affect the economic outlook and inflation prospects and to adjust monetary policy accordingly.”

Markets not only see the hiking cycle as over, but expect the Riksbank to start cutting rates sometime in the middle of next year.

Thedeen said the Riksbank would return to the outlook for rates at the central bank’s next meeting at the end of January.

Earlier on Wednesday, leading think tank NIER said it expected inflation to fall rapidly ahead and the Riksbank to start cutting rates in summer next year with the policy rate ending 2024 at around 3.3%.

(Reporting by Terje Solsvik, editing by Louise Rasmussen and Andrew Heavens)