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MNI Riksbank Preview: Sep '24 - Cutting Pace To Remain At 25bp

The Riksbank is expected to deliver its third 25bps cut of 2024 on September 25, bringing the policy rate to 3.25%.
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MNI (LONDON) - EXECUTIVE SUMMARY

  • The Riksbank is expected to deliver its third 25bps cut of 2024 on September 25, bringing the policy rate to 3.25%. 
  • The MNI Markets Team currently expects three more 25bp cuts to be delivered in 2024 (including in September), which would imply a year-end policy rate of 2.75%.
  • We view the risks as tilted towards a faster pace of easing in the remainder of this year (not least after the Fed’s 50bp cut last week), but think the bar to increasing the pace of easing to 50bp increments has not yet been reached.
  • The updated rate path, presented alongside the September Monetary Policy Report (MPR), should see a downward revision. The path may indicate a non-zero probability of 50bp cuts at the November and/or December meetings, with the revisions taking into account August’s guidance tilt and the easing of global financial conditions since June.
  • Although we don’t think it is likely the Riksbank cuts as aggressively as implied by markets this cycle, we cannot rule out further dovish repricing if the Riksbank opens the door to 50bp cuts in its September guidance/rate path. 

For the full preview, including a summary of sell-side views, see here: MNI Riksbank Preview - 2024-09.pdf

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MNI (LONDON) - EXECUTIVE SUMMARY

  • The Riksbank is expected to deliver its third 25bps cut of 2024 on September 25, bringing the policy rate to 3.25%. 
  • The MNI Markets Team currently expects three more 25bp cuts to be delivered in 2024 (including in September), which would imply a year-end policy rate of 2.75%.
  • We view the risks as tilted towards a faster pace of easing in the remainder of this year (not least after the Fed’s 50bp cut last week), but think the bar to increasing the pace of easing to 50bp increments has not yet been reached.
  • The updated rate path, presented alongside the September Monetary Policy Report (MPR), should see a downward revision. The path may indicate a non-zero probability of 50bp cuts at the November and/or December meetings, with the revisions taking into account August’s guidance tilt and the easing of global financial conditions since June.
  • Although we don’t think it is likely the Riksbank cuts as aggressively as implied by markets this cycle, we cannot rule out further dovish repricing if the Riksbank opens the door to 50bp cuts in its September guidance/rate path. 

For the full preview, including a summary of sell-side views, see here: MNI Riksbank Preview - 2024-09.pdf