Sweden's Riksbank sees up to three rate cuts by year end, minutes show
Swedish central bank held rates at 3.75% on June 27
Plans to cut rates two or three times before year end
Next policy announcement due on Aug 20
Adds further comment from central bank governor in paragraph 10
STOCKHOLM, July 3 (Reuters) -Sweden's central bank may be able to speed up interest rate cuts in the second half of this year if inflation remains tame, the minutes of the most recent policy meeting, published on Wednesday, showed.
The Riksbank held its key rate unchanged at 3.75% on June 27 and said it expected to ease policy two or three times before the end of the year following its first cut in eight years in May. At the May meeting, it said that it forecast only two more cuts.
"My assessment is that it is somewhat more probable that we will cut the policy rate three times, than twice, during the second half of the year," Governor Erik Thedeen said in the minutes.
The Riksbank has been growing increasingly confident that inflation, which peaked at over 10% at the end of 2022, is under control and even a slight uptick in May has not dented that belief.
Thedeen said a weaker labour market and more muted upside risks to inflation were reasons to proceed faster with rate cuts.
"We expect three additional rate cuts this year with the next one coming in August," Swedbank said in a note.
The central bank, however, also stressed that rate cuts should be made gradually, reflecting uncertainty about whether inflation might prove stickier than expected.
The Riksbank is also keeping a close eye on the timing and pace of rate cuts by the U.S Federal Reserve and the European Central Bank.
While the Riksbank has stressed that it sets policy based on domestic factors, it may not want to get too far ahead of other central banks.
"Higher inflation abroad means that interest rates abroad may be higher than would otherwise have been the case, which could lead to a weaker krona," Thedeen said.
The Riksbank will announce its next policy decision on August 20. It will have inflation figures for June and July by then.
Swedish rates and inflation: http://tmsnrt.rs/1qEN4Rz
Reporting by Simon Johnson, Anna Ringstrom, Johan Ahlander and Niklas Pollard; editing by Niklas Pollard and Christina Fincher
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