The Sveriges Riksbank, the country’s central bank, ended a four-year experiment with a negative interest rate policy (NIRP) at the end of 2019 amid growing concern that it was pumping up a private sector debt bubble and distorting the financial system. Market commentators said that the move could herald the start of a global trend away from NIRP. The eurozone and Japan currently have negative rates.
Yet a finance ministry report released this month was interpreted as “a thinly veiled message to the central bank” that rates should be cut back below zero, says Bloomberg. With growth expected to come in at just 1.1% this year, it seems the government is keen for some monetary support.
Weak inflation, which remains below the 2% target and is expected to fall further over the next two years, may well force the Riksbank’s hand, says Melanie Debono for Capital Economics. We think that the bank “will cut rates back below zero this year as slow growth keeps a lid on inflation”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
On the contrary, an improved outlook for global trade and an undervalued currency could yet see growth and inflation surprise on the upside, says Pierre Gave of Gavekal Research. Sweden’s small and open economy has “a habit of leading economic cycles”, making it something of a global economic “bellwether”. Keep an eye on it.
-
Nvidia's earnings live: China trade the key question for semiconductor giant’s resultsNvidia's shares have opened strongly ahead of its earnings, as analysts question whether Blackwell sales can make up for lost China revenue following Trump’s trade crackdown
-
8 of the best lakeside properties for saleThe best lakeside properties – from a house on the southeastern shore of Loch Lomond, to a 15th-century hall overlooking a lake in King’s Lynn, Norfolk
-
Halifax: House price slump continues as prices slide for the sixth consecutive monthUK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
-
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
-
Pension savers turn to gold investmentsInvestors are racing to buy gold to protect their pensions from a stock market correction and high inflation, experts say
-
Where to find the best returns from student accommodationStudent accommodation can be a lucrative investment if you know where to look.
-
The world’s best bargain stocksSearching for bargain stocks with Alec Cutler of the Orbis Global Balanced Fund, who tells Andrew Van Sickle which sectors are being overlooked.
-
Revealed: the cheapest cities to own a home in BritainNew research reveals the cheapest cities to own a home, taking account of mortgage payments, utility bills and council tax
-
UK recession: How to protect your portfolioAs the UK recession is confirmed, we look at ways to protect your wealth.
-
Buy-to-let returns fall 59% amid higher mortgage ratesBuy-to-let returns are slumping as the cost of borrowing spirals.
