MNI Riksbank Review: September 2023 - The Table Mountain Peak?

Executive Summary:

• The policy rate was raised by 25bps to 4.00%, in line with analyst consensus.
• The door for a November hike was kept open with the policy path forecast being revised upwards, now indicating a rate of 4.09% in Q4 2023 (vs 4.05% prior).
• Governor Thedéen noted that the Riksbank were moving to a “data dependent” approach to policy.
• The Riksbank will begin hedging a portion of FX reserves from 25 September and also announced that from 2024, they will hold 8 monetary policy meetings per year, compared to 5 currently.

MNI Riksbank Review - 2023-09.pdf

The results of the Riksbank September meeting decision were broadly in line with those noted in our preview, but perhaps slightly less hawkish than we had expected. In the press conference, Governor Thedéen noted that the Riksbank were moving to a “data dependent” approach to policy and refrained from committing to any future moves as had been done previously. However, when asked if the Riksbank’s policy outlook more closely resembled a “Matterhorn” or a “Table Mountain”, the Governor was quick to confirm the latter – rates will remain at a high level for longer.

Looking ahead, the “data dependent” stance will put increased focus on incoming datapoints. While the policy path currently indicates a greater chance of a hold than a hike in November, the usual suspects of persistent underlying inflation and a weak krona may force another 25bps out of the Riksbank.