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RIKSBANK: MNI Riksbank Review: Dec '24 - Caution Set To Prevail

RIKSBANK
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EXECUTIVE SUMMARY

  • The Riksbank Executive Board unanimously voted to cut rates by 25bps to 2.50% in December. Policy rates have been lowered by 150bps through the course of this year, and the Executive Board assesses that a “more tentative” approach to policy is required going forward, in order to assess the impact of tightening-to-date on the real economy and the uncertain outlook.
  • The Riksbank continued to guide for another cut in H1 2025, which was a little more cautious than we had expected.
  • Arguably the most cautious element to the decision was the end-point of the rate path, which was unchanged at 2.25%. All the analysts who expressed a view on the rate path in the lead-up to the decision had expected the “terminal rate” to be revised 10-20bps lower.
  • As highlighted in our preview, we continue to believe the Riksbank will be happy to cut rates below 2.25% if justified by the incoming data. However, the bar to cutting below this level (and increasingly so below 2%) is probably a little higher than before. 

SEE HERE FOR THE FULL PUBLICATION

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EXECUTIVE SUMMARY

  • The Riksbank Executive Board unanimously voted to cut rates by 25bps to 2.50% in December. Policy rates have been lowered by 150bps through the course of this year, and the Executive Board assesses that a “more tentative” approach to policy is required going forward, in order to assess the impact of tightening-to-date on the real economy and the uncertain outlook.
  • The Riksbank continued to guide for another cut in H1 2025, which was a little more cautious than we had expected.
  • Arguably the most cautious element to the decision was the end-point of the rate path, which was unchanged at 2.25%. All the analysts who expressed a view on the rate path in the lead-up to the decision had expected the “terminal rate” to be revised 10-20bps lower.
  • As highlighted in our preview, we continue to believe the Riksbank will be happy to cut rates below 2.25% if justified by the incoming data. However, the bar to cutting below this level (and increasingly so below 2%) is probably a little higher than before. 

SEE HERE FOR THE FULL PUBLICATION