MNI Riksbank Review: August 2024 - Unsurprisingly Dovish Tilt

EXECUTIVE SUMMARY

• The Riksbank delivered its fully anticipated 25bp cut, bringing the policy rate to 3.50%. Of more consequence was the dovish tilt in the guidance, which was largely (but not unanimously) expected.
• The policy statement noted that “if the inflation outlook remains the same, the policy rate can be cut two or three more times this year”. The latter case would imply cuts at each of the three remaining meetings this year (September, November and December).
• At the press conference, Governor Thedéen refrained from commenting on whether a 50bp rate cut was discussed, instead pointing to the release of the Minutes, due on August 26.
• Markets came into the decision already pricing 100bps of rate cuts through the remainder of 2024 (including this week’s cut), so the guidance tilt was not enough to spark any meaningful reaction in SEK.
• Should inflation developments remain close to the target, and the broader economy fail to recover meaningfully, we think three further 25bp cuts is a reasonable base case and will likely be reflected in the September MPR rate path.

Access the full review, including a summary of 11 sell-side views, using the following link:

MNI Riksbank Review - 2024-08.pdf