On the surface, the Riksbank should be cutting the so-called policy rate as inflation fell last month and is nearing the bank's 2 percent target. However, inflation when considering CPIF with the effect of energy prices removed currently stands at 3 percent, higher than expected.
The Riksbank indicated it could lower the policy rate more than predicted due to favorable inflation trends and weaker economic activity. If inflation remains stable, the rate could be cut two or three times in the second half of the year.
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