MNI Riksbank Review May '24: June Cut Unlikely As Easing Begins

EXECUTIVE SUMMARY

• The Riksbank Executive Board unanimously voted to cut the policy rate by 25bps to 3.75%. We wrote in our preview that in spite of the SEK weakening since the March meeting, the domestic macroeconomic data appeared to have met the threshold to begin easing.
• The accompanying guidance was consistent with the March policy rate path. This suggests that a rate cut in June is quite unlikely, a notion echoed by Governor Thedéen in the press conference (though it wasn’t explicitly ruled out).
• Overall, we think the May decision was quite balanced, if a little on the hawkish side. The SEK weakened following the release, but the reaction was fairly contained against G10 currencies given that a rate cut was ~80% priced.
• Analysts generally view the May meeting as a “hawkish cut”. Of the 12 reviews we have seen, the majority (7) align with the Riksbank in expecting 3 total cuts this year (including the May cut), while 4 look for 4 total cuts.

For our full review including a summary of sell-side views, see the PDF here:

MNI Riksbank Review - 2024-05.pdf