Riksbank maintains its Rate at 4.00% as expected; "It is likely that the policy rate can be cut in May or June if inflation prospects remain favourable."

COMMENTARY 

• Monetary policy needs to be adjusted cautiously


• there are risks that could cause inflationary pressures to rise again.


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

RATE FORECAST

ECONOMIC FORECASTS

Reaction details (08:38)

• 
  EUR/SEK was ticking higher into the announcement. On the decision, it lifted from 11.4890 to a session high of 11.5116 before paring back towards pre-release levels.

Analysis details (08:45)

• Overall, very much as expected from the Riksbank with rates left unchanged and guidance pointing towards a H1 cut. 


• The timing of that cut has been left open between either May or June, contingent on the development of inflation. On this, the SEK will likely play a key role as assuming the ECB/Fed go in June the Riksbank will be conscious of the fact that a cut in May could weaken the SEK even further, a dynamic which may tip the balance in favour of June over May unless inflation surprises to the downside in the interim. 


• As a reminder, the SEB FI survey (pre-meeting) highlighted that the odds of a June cut over May increase markedly if EUR/SEK is above 11.60 (currently 11.48, session high 11.51)

27 Mar 2024 - 08:30- Fixed IncomeImportant- Source: Newswires