In its latest economic prognosis, Swedbank predicted that the Riksbank, Sweden’s central bank, would raise interest rates by 25 points this April to 0.25 percent, with a steady succession of six further rises taking base interest rates to 1.5 percent by April 2023.
“We need to get used to the idea of higher rates,” the company’s chief economist, Mattias Persson, wrote in a comment. “The high inflation is going to make the Riksbank tighten up monetary policy much faster than what we had previously expected and to raise rates as early as April. At the same time we cannot rule out that the Riksbank gives a clear signal in April of a coming rates rise and then increases rates by 50 points at its June meeting.
Persson said that the resulting increase in mortgage rates would significantly reduce the real disposable income of potential buyers of property, which would keep property prices flat over the next year.
The bank expects consumer inflation of as higher as six percent during the spring and five percent over the whole year.