Heikensten lowers rate cut expectations

Although inflation is lower than expected, Riksbank governor Lars Heikensten has toned down market expectations that the central bank will lower interest rates in the near future.

In a speech given in Sala late last week the Riksbank governor pointed to a number of factors that could affect monetary policy; namely a strong economic upswing, households’ rapidly growing debt burden and the fact that low inflation is largely due to weak growth in prices on imported goods. These three factors suggest that a cut in interest rates is unlikely.

Sources: Dagens Nyheter, Svenska Dagbladet, Dagens Industri

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