Since the Riksbank’s last meeting in June, Swedish inflation and activity data have been weaker than policymakers expected. We think this will encourage them to cut the key policy rate from 3.75% to 3.5% next week and to indicate at least a further 50bp of cuts over the remainder of the year. Due to weak labour market data, we have lowered our forecast for the terminal rate from 3.0% to 2.5%.
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