Growth Indicators Argue Against Interest Rate Cut at Sweden's Central Bank in September, Says Commerzbank

09:45 AM EDT, 09/03/2025 (MT Newswires) -- At least the latest growth data doesn't suggest that Sweden's Riksbank will cut interest rates anytime soon, said Commerzbank.

Growth picked up nicely in Q2, supporting the Riksbank's expectations of an economic recovery, wrote the bank in a note to clients.

The picture is similar for leading indicators, stated Commerzbank. The economic trend indicator still shows that developments are lagging behind the average for the economy as a whole, as well as consumer confidence and confidence in the manufacturing sector.

Consumer confidence, which had slumped sharply in April, is still lagging behind, but has shown a rapid upturn in recent months, pointed out the bank. Confidence in the manufacturing sector has been on a downward trend since the economic upturn after the pandemic, but has recently stabilized.

In general, all three indicators have improved in recent months. Consumer confidence in particular is likely to please the Riksbank, as it assumes that consumption in particular will drive the economy.

However, the MPI for the manufacturing sector has also been on an upward trend since mid-2023 and even rose to 55.3 in August. In this respect, industrial activity is also likely to eventually pick up in Sweden, added the bank.

Although none of the sentiment indicators say anything about the strength of the recovery, they are pointing in the right direction and should give the Riksbank confidence that the recovery will continue and that an interest rate cut, if any, will only be necessary later in the year and not as early as September, according to Commerzbank.

The bank sees it similarly, especially if the inflation figures for September -- preliminary data will be published on Thursday, while final data next week -- continue to show little sign of easing price pressure and remain just over 3%.

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