Swedish Riksbank Rate 2.25% vs. Exp. 2.25% (Prev. 2.5%); forecast for the policy rate made in December essentially holds, but the Executive Board is prepared to act if the outlook for inflation and economic activity changes

• New information since December indicates that the outlook for inflation and economic activity remains largely the same.


• There are signs that an economic rebound is on the way, but activity remains weak.


• A stronger economy is important in its own right, but it is also a necessary condition for inflation to stabilise close to the target going forward.


• Monetary policy is forward-looking and guided by a tentative approach.


• There is particular uncertainty regarding developments abroad, for instance with regard to economic policy in the United States and Europe and the geopolitical tensions.


• There are also risks linked to the recovery in the Swedish economy and the krona exchange rate.

Reaction details (08:38)

• EUR/SEK knee-jerked higher from around 11.46 to 11.49 following the announcement, but this was entirely pared in the minutes after.


• As the dust-settles, EUR/SEK is now attempting to move a little higher (currently 11.4762); with some dovishness stemming from some outside bets of a hold being unwound.

Analysis details (08:44)

• As expected, the Riksbank cut its rates by 25bps to 2.25%, and steered clear from explicitly sending strong signals regarding the next rate cut at the Bank. The bank highlighted that "forecast for the policy rate made in December essentially holds, but the Executive Board is prepared to act if the outlook for inflation and economic activity changes". The Bank also brought focus on economic activity, noting that it remains weak but are seeing "signs that an economic rebound is on the way". EUR/SEK knee-jerked higher following the release, but pared this almost immediately. The pair then edged a little higher in the minutes after, with some dovishness stemming from some outside bets of a hold being unwound. The Minutes of this announcement will be released next week; on that, traders will be on the look out for if the Board is a little more aligned (given the mixed views seen in the last Minutes); focus will also be on what economic activity data warrants a next cut and then for insight into how close to the terminal the Riksbank is.

29 Jan 2025 - 08:30- Fixed IncomeGeopolitical- Source: Reuters