Sweden's economy has
slowed in recent months, but like many other countries, the impact of the cost of living crisis sparked by the war in Ukraine and the lingering effects of the pandemic has been milder than initially expected.
Uncertainty is high, with financial turbulence sparked
by problems at regional banks in the United States yet to have
settled down.
Nevertheless, Swedish business and household sentiment edged higher
in March , the second month in a row where the outlook has brightened.
Hard data, however, paints a less promising picture with retail sales dropping sharply in February, while inflation is still picking up.
As a result, the NIER forecast the central bank would hike its policy rate to 3.75% by July, which would mark the peak in the policy rate.
"The NIER's forecast is that the Riksbank will then start a series of rate cuts at the start of next year to stimulate demand in the economy," it said.
(Reporting by Simon Johnson, editing by Terje Solsvik and
Niklas Pollard)
