Riksbank cuts its Rate by 50bps as expected to 2.75% (prev. 3.25%); policy rate may also be lowered in December and H1 2025 (in line with what was communicated in September)

Rate decision

• To further support economic activity, the policy rate needs to be cut somewhat faster than was assessed in September. This is in reference to today's decision. 
  


• There are still few clear signs of a recovery.


• There are risks linked to the geopolitical tensions, the economic policy abroad, the krona exchange rate and economic activity in Sweden that can affect the outlook for economic activity and inflation and lead to a different monetary policy stance.

Bonds

• Now decided to maintain a holding of a nominal amount of SEK 20bln by trading in Swedish nominal government bonds. The decision means that the ongoing sales of nominal government bonds are expected to be concluded at the end of 2025.

Reaction details (08:39)

• EUR/SEK slipped in the minute preceding the decision, falling from 11.6329 to 11.6123, before rallying from 11.6123 to 11.6456 upon the decision.

Analysis details (08:53)

• As expected, the Riksbank delivered a 50bps cut bringing its policy rate to 2.75% (prev. 3.25%), but also vs some expectations of a smaller magnitude 25bps cut. The Bank noted that for today's decision, "to further support economic activity, the policy rate needs to be cut somewhat faster than was assessed in September". Forward guidance was largely a reiteration of the guidance communicated at the September meeting, noting that the "policy rate may also be lowered in December and H1 2025". EUR/SEK knee-jerked higher on the back of the policy decision to a session high of 11.6456, as traders digested the reiteration of guidance. However, within the past 10 minutes, the SEK has been very choppy; making another fresh high at 11.66, before once again bouncing back lower. 

07 Nov 2024 - 08:30- Fixed IncomeImportant- Source: Newsquawk