MNI BRIEF: Riksbank Stays On Hold, Leaves Door Open To Hike

The Riksbank left the policy rate unchanged at 4.0% at its November meeting but did not commit to a 4.0% peak, instead saying that it could raise the policy rate further in the new year if the inflation outlook warranted. (MNI RIKSBANK WATCH: Last Chance Saloon For Hike)

The Riksbank Executive Board's policy rate path retained a 4.1% peak. Analysts had been divided over whether the central bank would hike, with economic contraction and declining headline inflation accompanying stickiness in core inflation and there will be skepticism if, having not hiked in November, it will do so at some later stage.

"The forecast for the policy rate is that it may be raised further at the start of next year," the Riksbank stated, while noting that the Swedish economy is slowing down and that the deacceleration is beginning to reach the labour market with GDP expected to fall for a prolonged period. The forecasts in the quarterly Monetary Policy Report showed inflation on the target CPIF, CPI with a fixed interest rate, measure falling to 2.3% in 2024, down fro the previous forecast of 2.5% and to 1.7% in 2025, undershooting the 2% target.