The figure indicates lower interest rates already next year

 

My economy 

 

Policy rate  

 

The ECB can lower interest rates as early as March  

 

Advocates interest rate cuts in Sweden too: "Not unreasonable"  

 

Oskar Forsberg  

 

Published 17.35  

 

Last week, the Riksbank left the policy rate unchanged. 

  

But the reductions are now not far away - at least if the interest rate market is to be believed. 

  

There could be as many as three cuts next year. The probability that the European Central Bank (ECB)  will cut its policy rates by 25 basis points (0.25 percentage points) after the April meeting in 2024 is now basically 100 percent, if you look at the pricing in the interest rate market.  

 

This is reported by TT. 

  

At the same time, more and more people are beginning to believe that the reduction will come as early as March.  

 

The ECB's policy rates are important for the Riksbank and the interest rate market now expects at least three interest rate cuts in 2024, according to TT. 

 

ECB's top hen Christine Lagarde. Photo: Michael Probst/AP  

 

The ten-year interest rate an indicator 

 

The term "interest rate market" includes several different things. 

 

- A market interest rate is the interest rate that different actors are prepared to pay for different types of credit. It is priced according to supply and demand. So when the interest rate on, for example, bonds, government bills and housing bonds falls, it signals a falling interest rate market, says Christina Sahlberg, savings economist at Compricer.  

 

Another thing could be the longer interest rates. 

 

- When you see that the ten-year interest rate starts to swing downward, you know that it is on the way to lower interest rates, says Christina Sahlberg.  

 

Christina Sahlberg at Schibsted-owned Compricer. Photo: Jerker Ivarsson 

 

The independent economist Claes Hemberg says that the interest rate market is largely controlled by the banks. 

- Their own analysts trade with, for example, five- and six-year interest rates, based on their own analyses, he says and adds:  

 

- It was already at the beginning of October that the long-term interest rates started to fall.  

 

ECB important for the Riksbank  

 

The ECB's key interest rates are an important factor for the Riksbank's monetary policy decisions, and as far as the Riksbank is concerned, the interest rate market is currently counting on at least three interest rate cuts in 2024, perhaps more. 

 

- It is not unreasonable that it will be like this, says Shoka Åhrman, savings economist and strategist at SPP and Storebrand.  

 

Views on ECB interest rates next year have changed rapidly among speculators and investors in the market recently, as inflationary pressures eased in the eurozone. Down from over 10 percent in inflation last year to what is expected to be 2.7 percent in the first November estimate. 

 

- You don't want the market to run in advance, but it's a difficult balancing act, says Shoka Åhrman. 

 

Savings economist Shoka Åhrman. Photo: Spp  

 

Changed forecast  

 

A little over a month ago, pricing in the market indicated that it would take until June for the ECB to lower key interest rates.  

 

But now it could already be in March.  

 

In total, the ECB is expected to have cut interest rates by 113 basis points by the end of 2024, according to interest rate market pricing. This corresponds to four and a half interest rate cuts of 25 points each. 

 

It remains to be seen how the Riksbank will do. 

 

- The idea will be more about how they do than how they communicate, says Shoka Åhrman.