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A string of soft domestic activity data has shifted consensus towards a 50bp Riksbank cut in November to 2.75%, with markets tilted heavily towards that outcome.
The door was opened to a 50bp cut in the September policy statement, which noted that rates would likely be cut in November and December “if the outlook for inflation and economic activity remains unchanged”, with a 50bp cut “possible at one of these meetings”.
We think there is enough of a case for a 50bp cut to be delivered. The inflation outlook continues to appear consistent with the Riksbank’s 2% target, and growth concerns remain prevalent both domestically and in the Eurozone.
The weak SEK presents the obvious case for a more cautious 25bp cut, which would be the most hawkish scenario for markets. Of the 16 analyst previews we have seen, only 1 looks for such a move.
Sign up now for free trial access to this content.
Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.
Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MNI (LONDON)
EXECUTIVE SUMMARY
A string of soft domestic activity data has shifted consensus towards a 50bp Riksbank cut in November to 2.75%, with markets tilted heavily towards that outcome.
The door was opened to a 50bp cut in the September policy statement, which noted that rates would likely be cut in November and December “if the outlook for inflation and economic activity remains unchanged”, with a 50bp cut “possible at one of these meetings”.
We think there is enough of a case for a 50bp cut to be delivered. The inflation outlook continues to appear consistent with the Riksbank’s 2% target, and growth concerns remain prevalent both domestically and in the Eurozone.
The weak SEK presents the obvious case for a more cautious 25bp cut, which would be the most hawkish scenario for markets. Of the 16 analyst previews we have seen, only 1 looks for such a move.
