MNI Riksbank Review - March '24: Coin Toss Between May & June

The Riksbank indicated that a May rate cut is well on the cards at its March monetary policy meeting, with Governor Thedéen acknowledging that the revised rate path assigns a 50% probability of such a move in the press conference.

• The MNI Markets Team had expected the revised policy path to tilt slightly in favour of a June cut, but the Riksbank’s messaging suggests they have no problem easing policy before the ECB/Fed if they deem it warranted by the data.
• In the press conference, Governor Thedéen noted that if all data (i.e. not just inflation) were in line with the March MPR projections, a cut in May would be the most likely scenario.
• In this respect, the March inflation reading (released on April 12, and the sole inflation reading before the May meeting) may be the deciding factor in determining when the first cut takes place.
• However, the SEK remains a risk to the outlook, and Thedéen confirmed that a weaker development of the exchange rate in the coming months would impact rate decisions in May and June.

MNI Riksbank Review - 2024-03.pdf