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MNI Riksbank Preview - May 2024: Threshold For Cut Appears Met

The Riksbank is expected to deliver its first cut of the cycle at the May meeting.

Central Bank PreviewHomepageRiksbank Market NewsRiksbank - PreviewCentral Bank ReportsMarkets

EXECUTIVE SUMMARY

  • The Riksbank is expected to deliver its first cut of the cycle at the May meeting. In the March press conference, Governor Thedéen noted that if all data (i.e. not just inflation) were in line with the March MPR projections, a cut in May would be the most likely scenario. The macroeconomic data since the March meeting appears to have met this threshold.
  • If a rate cut is enacted, we expect it to be delivered with a hawkish tilt in order to protect the SEK from a renewed bout of weakness. If a rate cut is enacted, we expect it to be delivered with a hawkish tilt in order to protect the SEK from a renewed bout of weakness.
  • There remains a material risk that the Riksbank elects to remain on hold in May, a move which would purely be driven by views on the krona. If this scenario were to play out, we would expect a very strong signal (potentially even a pledge) that rates will instead be cut in June.
  • Of the 18 sell-side previews that MNI has seen, 13 expect the Riksbank to deliver its first rate cut in May, with the remaining 5 opting for June

For our full preview, including a summary of sell-side views, see the PDF here:

MNI Riksbank Preview - 2024-05.pdf


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EXECUTIVE SUMMARY

  • The Riksbank is expected to deliver its first cut of the cycle at the May meeting. In the March press conference, Governor Thedéen noted that if all data (i.e. not just inflation) were in line with the March MPR projections, a cut in May would be the most likely scenario. The macroeconomic data since the March meeting appears to have met this threshold.
  • If a rate cut is enacted, we expect it to be delivered with a hawkish tilt in order to protect the SEK from a renewed bout of weakness. If a rate cut is enacted, we expect it to be delivered with a hawkish tilt in order to protect the SEK from a renewed bout of weakness.
  • There remains a material risk that the Riksbank elects to remain on hold in May, a move which would purely be driven by views on the krona. If this scenario were to play out, we would expect a very strong signal (potentially even a pledge) that rates will instead be cut in June.
  • Of the 18 sell-side previews that MNI has seen, 13 expect the Riksbank to deliver its first rate cut in May, with the remaining 5 opting for June

For our full preview, including a summary of sell-side views, see the PDF here:

MNI Riksbank Preview - 2024-05.pdf