Central bank flags series of rate cuts in year ahead
Says wary of setbacks and will proceed cautiously
Sees policy rate at 3.44 in Q4
Next decision on May 8

STOCKHOLM, March 27 Reuters Sweden39;s central bank held its key rate at 4.00 on Wednesday, as expected, and said inflationary pressures had eased enough for it to make the first of several policy rate cuts in the coming months.

Headline inflation is now close to the central bank39;s 2 target, after peaking at over 10, and is expected to keep falling.

Meanwhile, growth in large parts of the economy has ground to a halt and many households are struggling with mortgage payments at their highest level for more than 15 years.

It is likely that the policy rate can be cut in May or June if inflation prospects remain favourable, the central bank said in a statement.

The Riksbank said that it remained concerned about setbacks, not least the chance that easier policy could weaken the Swedish crown.

Monetary policy should therefore be adjusted cautiously going forward, in the form of gradual cuts in the policy rate, the central bank said.

The Riksbank forecast the policy rate at 3.44 in the fourth quarter.

We are forecasting a first 25 basis point rate cut in May though it could well be in June which would be after the ECB and Fed meetings and three more before yearend, said Andrew Kenningham, Chief Europe Economist at Capital Economics.

The Swedish crown weakened marginally against the euro after the…