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MNI Riksbank Review: June '24 - Summer Cut Increasingly Likely

The Riksbank held rates at 3.75% as unanimously expected, but the revised rate path within the June MPR was more dovish than expected.

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EXECUTIVE SUMMARY

  • The Riksbank held rates at 3.75% as unanimously expected, but the revised rate path within the June MPR was more dovish than expected.
  • The policy statement indicated that “if inflation prospects remain the same, the policy rate can be cut two or three times during the second half of the year”. In May, the guidance was for two cuts.
  • The June MPR rate path had the policy rate averaging 3.67% in Q3 2024, down from 3.70% in the March MPR. There were larger downward revisions further out, with the Q1 2025 path revised 12bps lower to 3.08%. Overall, these downward revisions were larger than analyst expectations coming into the decision.
  • The rate path suggests that an August cut is very likely, with some chance of cuts at both the August and September meetings.
  • As such, a number of analysts previously expecting the next 25bp cut in September have brought forward their calls to August. Consensus now tilts towards three more cuts in 2024

Our full review, including a summary of sell-side views, can be found here:

MNI Riksbank Review - 2024-06.pdf

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EXECUTIVE SUMMARY

  • The Riksbank held rates at 3.75% as unanimously expected, but the revised rate path within the June MPR was more dovish than expected.
  • The policy statement indicated that “if inflation prospects remain the same, the policy rate can be cut two or three times during the second half of the year”. In May, the guidance was for two cuts.
  • The June MPR rate path had the policy rate averaging 3.67% in Q3 2024, down from 3.70% in the March MPR. There were larger downward revisions further out, with the Q1 2025 path revised 12bps lower to 3.08%. Overall, these downward revisions were larger than analyst expectations coming into the decision.
  • The rate path suggests that an August cut is very likely, with some chance of cuts at both the August and September meetings.
  • As such, a number of analysts previously expecting the next 25bp cut in September have brought forward their calls to August. Consensus now tilts towards three more cuts in 2024

Our full review, including a summary of sell-side views, can be found here:

MNI Riksbank Review - 2024-06.pdf