Swedish households squeezed by rising prices and increasing borrowing costs face no relief from central banks until well into next year, according to Svenska Handelsbanken AB.
(Bloomberg) — Swedish households squeezed by rising prices and increasing borrowing costs face no relief from central banks until well into next year, according to Svenska Handelsbanken AB.
The country’s third largest bank by market capitalization says any expectations of imminent rate cuts are misplaced, and expects the Riksbank to keep its policy rate at 3.75% until mid-2024, after likely announcing a 25 basis-point hike at its next meeting in slightly more than a month.
“We don’t believe that lower inflation alone is enough to dispel central banks’ concerns, if it is combined with the moderate economic slowdown that is our main scenario,” Handelsbanken said in its global economic forecast on Wednesday. “It would take a forceful downturn, where focus shifts from fighting inflation to handling a crisis, for more immediate rate cuts to materialize.”
Handelsbanken expects Sweden’s economic output to shrink by 0.7% on calendar-adjusted terms this year, as consumers reduce spending in response to rising costs. The bank estimates that many households have seen their budget surpluses slashed by more than half.
“After normal living expenses, our model calculation suggests that a family has 9,000 kronor ($848.23) less left to live on per month,” Chief Economist Christina Nyman said in a statement. “This means less money to go into savings or on consumption.”
Handelsbanken’s Nordic GDP forecasts
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