STOCKHOLM (dpa-AFX) - Policymakers of Riksbank are likely to signal a further rate hike in the next 12 months but it is unlikely to materialize, ING said.
'We think this future tightening is unlikely to materialise - or at least not as soon as the central bank is currently projecting,' James Smith and Petr Krpata, economists at ING said.
Riksbank is set to announce its next policy decision on July 3.
Economists noted that domestic demand is likely to remain fairly lacklustre, despite a slightly more solid spring housing market performance.
Moreover, there are some tentative signs that inflation expectations are slipping among labor organizations.
The next round of wage negotiations in the spring might not yield the kind of agreement the central bank is forecasting, ING economists observed. The bank forecast wage growth to accelerate to 3 percent in 2020 from 2.6 percent in 2018.
In addition, further deterioration in global trade relations could also spell bad news for Sweden's relatively open economy, economists said.
Smith and Krpata observed that the Riksbank is set to keep the repo rate where it is currently for the foreseeable future. The repo rate stands at -0.25 percent.
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