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Analysts expect rate cut from Swedish Riksbank

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17:08 CEST+02:00
(AFX) The Swedish Riksbank is expected to cut rates by 25-50 basis points in June following recent weak economic data, said analysts.

A 50 basis point cut would take Swedish rates to 1.50 pct, an historic low.

Swedish new industrial orders fell 1.2 pct in March from February, and fell 5.0 pct compared with the same period a year earlier, the Central Statistical Bureau said yesterday.

The data follows weak April PMI for the manufacturing sector in April, and lacklustre April new car registrations.

SEB said in its Spring Nordic economic outlook report that it now expects the Riksbank to cut the repo rate by 50 basis points to 1.50 pct in June due to the sluggish economy. A survey by Dagens Industri today shows most analysts expect a rate cut before September.

Investment bank Calyon said yesterday's industrial orders data shows that Swedish domestic orders contracted by 8 pct year-on-year in March while foreign orders fell by 3 pct over the same period.

"The same message was also sent by the latest PMI survey, which showed domestic orders in contraction territory for the first time since September 2003," said Calyon.

Calyon said although the data does not 'seal the case' for a rate cut in June "they nevertheless support market sentiment in this direction".

The real unemployment rate in Sweden was 10.9 pct in March, when the official number of unemployed is combined with people on job creation schemes and unemployed people either studying or failing to look for work in the last four weeks.

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