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Political Economy
Swedish central Banks could reduce key interest rates soon but how would that affect?
Tuesday, 14 February 2012On Thursday it is expected that the Swedish central, the Riksbank’s governor, Stefan Ingves, again will lower the Swedish policy rate. But the general expectation now is that the expected lower mortgage rates could be a distant perception.
On the whole, more are leaning towards that the Riksbank will cut its repo rate, probably to 1.5 percent from the current 1.75 percent. More rate cuts are expected later this year, as the economy weakens.
On Thursday the first rate notice from the Riksbank will come. The day before holding the Executive Board's monetary policy meeting, which is peculiar in that two new members are involved in the decision - Kerstin af Jochnick and Per Jansson, who took office at the end.
It is likely, however, that the Governor Stefan Ingves can rally a majority around his relatively tight line. The interest rate cut, is now expected by many analysts to be viewed as entirely obvious but to a very less extent. The current interest rate path, which the Executive Board held in December, which was pointing to an unchanged level could be held also.
What ever the case may be, the common man is likely not going to feel the effect of any cut as the general consensus now is that those cuts are doing to satisfy the banks. When the rates where cut last December, banks raised their interest rates and it seems this is what will happen this time. That means the news that the central bank might cut interest rates would make commercial banks to raise theirs. Then after the central banks has cut its repo rates, the banks will then reduce their rates by a tiny level which will still give then a well calculated gain.
By Scancomark.se Team
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