MNI BRIEF: Krona, Fed Could Delay Rate Cut - Riksbank Minutes
Krona depreciation and slower U.S. easing could delay a Riksbank rate cut likely in May or June, March meeting minutes show.
Riksbank policymakers agreed conditions were in place for a first rate cut in May or June but a krona depreciation and delayed policy easing by the U.S. Federal Reserve could delay the move, Executive Board March meeting minutes revealed.
All five members supported both the decision to leave the policy rate unchanged and forecasts showing a 25-basis-point cut on the way with a roughly 50/50 chance of it coming in May or June.
But Governor Erik Thedeen said it was important the krona did not continue to depreciate and Deputy Governor Per Jansson cited linkages between krona depreciation and delays to easing abroad as a key risk. (See MNI INTERVIEW: Krona A Factor In Riksbank Cut Timing)
"A postponement of rate cuts in the United States may also have a bearing on the European Central Bank's monetary policy plans, especially of course if the delay becomes significant," Jansson said.