STOCKHOLM (Reuters) – Sweden’s central bank held its key rate unchanged at 4.00% on Wednesday as expected and said that inflation pressures had now eased enough for the policy rate to be cut in the coming months.

“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.

After two years of rapid rate hikes, headline inflation is now close to the central bank’s 2% target after peaking at over 10%.

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.

In February, the Riksbank said rates had peaked and that it might be possible to ease policy in the first half of the year.

© Reuters. A view of an entrance of Sweden's central bank in Stockholm, Sweden, August 12, 2016. Picture taken August 12, 2016. REUTERS/Violette Goarant/File Photo

Analysts in a Reuters poll had forecast no change in rates at the March meeting and for the central bank to flag a cut in May or June – the first of several seen this year.

The Riksbank announces its next monetary policy decision on May 8.

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