Riksbank cuts its Rate by 25bps as expected to 3.50% (prev. 3.75%); Policy rate can be cut two or three more times this year - somewhat faster than the Board expected in June

INFLATION

• Inflation is close to the target and expected to remain so even in the slightly longer term. However, the outlook for inflation is uncertain.

GDP

• GDP growth is weak and developments on the labour market are subdued, but unemployment is not expected to rise much further.

RATE

• Executive Board assesses that the policy rate can be cut somewhat faster than was assessed in June.


• If the inflation outlook remains the same, the policy rate can be cut two or three more times this year.

RISKS

• There are risks linked, for instance, to the geopolitical situation, economic activity in Sweden and abroad, and the krona exchange rate that can lead to a different outcome for inflation and thereby a different monetary policy.

Reaction details (08:45)

• EUR/SEK came under some modest pressure ahead of the policy announcement, falling from 11.43 to 11.41 in the 10 minutes before the announcement. In the 15 minutes after the rate decision, this moved pared entirely and EUR/SEK is now at an incremental session high of 11.44.

Analysis details (08:36)

• Overall, as expected. The guidance for "two or three more times this year" in terms of policy cuts is a dovish shift vs the guidance seen at the last gathering for "two or three times in H2", as it opens the door to a cut per meeting; no real market reaction seen as this is broadly in-fitting with market pricing.


• From the press conference at 10:00BST we look for any language around the SEK, last time Thedeen described it as "undervalued". Additionally, for any insight into whether a 50bps was discussed by any member and/or if it is seen as an option for one of the remaining H2 meetings.

20 Aug 2024 - 08:30- ForexData- Source: Riksbank