(Adds detail, background, analyst comment)
STOCKHOLM, Jan 28 (Reuters) - Inflation expectations among key economic and financial groups in Sweden have fallen sharply in recent months and money market players see interest rates cut further, an influential poll showed on Wednesday.
The Nordic country is already in recession and some economists see the economy contracting by as much as 2 percent this year, hit by the global economic downturn.
The survey of employee and employer organisations, purchasing managers and money market players, carried out by research institute Prospera on behalf of the central bank, showed headline inflation was seen at 1.1 percent in 12 months and 1.5 percent in two years.
The outcome compared with an October poll which showed consumer prices expected to be up 3.2 percent in a year and up 2.8 percent in two years.
"This represents a collapse in inflation expectations, but it can hardly have come as any huge surprise," SEB economist Henrik Mitelman said. "For the Riksbank's part, this means they cannot but cut the repo rate. We think the repo rate will be lowered by 75 basis points in February and by another 75 basis points in April."
The survey also growth expectations down sharply with gross domestic product seen flat this year and up only 1.1 percent in two years. This compared with the 1.8 percent and 2.1 percent seen in the previous poll.
"Inflation and GDP growth expectations in the one and two year perspective have plummeted since previous survey," Prospera said in a statement.
"Wage increase expectations are down as well. However, an economic recovery with its ensuing inflation effects is believed to take place after the next twelve months."
The poll showed expectations among money market players that the central bank would follow up its record 1.75 percentage point rate cut in December with further cuts in the coming months. The repo rate was seen at 1.3 percent in three months and at 1.1 percent in a year.
In the previous survey, the repo rate was seen at 4.6 percent in three months and at 3.8 percent in a year. The key rate is currently at 2.00 percent. (Reporting by Niklas Pollard and Johan Sennero; Editing by Jan Dahinten)