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Riksbank May Cut Main Rate to 1.1% in 12 Months, Survey Shows

Oct. 10 (Bloomberg) -- Sweden’s central bank will cut its main lending rate to 1.1 percent in the next year, according to a survey of money-market traders and investors.

Consumer prices will rise 1.2 percent in the next 12 months, the TNS Sifo Prospera survey commissioned by the Stockholm-based Riksbank showed. Prices will increase 1.7 percent the following year, it showed.

The Riksbank last month cut its benchmark repo rate for a third time since December, reducing it to 1.25 percent as manufacturing in the export-dependent Nordic economy suffers from the European debt crisis. It predicted unchanged rates until the middle of next year for the biggest Nordic economy, which sells about half of its output abroad. About 70 percent of exports go to Europe where countries including the Netherlands and France are cutting spending to reduce debt.

The central bank’s main rate is expected at 1.5 percent in two years as the Swedish economy will grow 1.5 percent in the next 12 months and 2 percent the following year, according to the survey published today.

To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net.

To contact the editor responsible for this story: Jonas Bergman in Stockholm at jbergman@bloomberg.net

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