The Riksbank is expected to bring its policy rate to 2.50% with a 25bp cut in December.
MNI (LONDON) - EXECUTIVE SUMMARY
- The Riksbank is expected to bring its policy rate to 2.50% with a 25bp cut in December. Although inflation has tracked a little above the September MPR projections over the past three months, continued softness in domestic economic activity means there is little reason for the Executive Board to go against its November guidance.
- The December decision includes an updated monetary policy report and rate path projection. Since the September rate path only incorporated a small implied probability of a 50bp cut in November or December, we should see a mechanical shift lower at the front-end of the December path.
- Although recent commentary from Executive Board member’s Seim, Breman and Jansson suggests the November guidance (i.e. another cut in H1 2025) still holds, we think this timeframe may be narrowed down to Q1 in the policy statement. The Riksbank’s bias remains tilted towards further easing for now, and keeping the existing guidance could be seen as too cautious/vague by markets, possibly eliciting a hawkish reaction.
- Analysts are unanimous in expecting a 25bp cut at the December meeting. From the previews we have seen, most expect a terminal rate of either 1.75% or 2.00%.
SEE HERE FOR THE FULL PUBLICATION: MNI Riksbank Preview - 2024-12.pdf
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