Guidance Broadly As Expected, Risks Skewed Toward June Cut

The Riksbank's guidance and policy rate forecast changes appear broadly as expected in our preview. While a rate cut in May is noted as a possibility, this is not a certainty and risks appear skewed towards the June meeting in the policy rate path.

• SEK has weakened on the release, but moves have been limited overall.
• The largest revisions to the rate path are in 2025, with a 100bps shift lower. Overall, the revisions appear to validate the credibility of the Riksbank's alternative scenarios, with the new rate path slightly below the "low inflation scenario" from the November MPR.
• In the March MPR, the alternative scenarios look at the path for the policy path when inflationary pressures are above or below forecast.
• In the high inflation scenario, there is a risk of the policy rate being raised further in 2024, while in the low inflation scenario, a less contractionary approach is adopted.
• The decision to keep rates on hold was unanimous amongst the Executive Board, and no changes were made to the pace of QT as expected.