Riksbank Opens Door To H1 '24 Rate Cuts; QT Increased To SEK6.5bln/month

The Riksbank have indicated in their February policy statement that rates can "probably be cut sooner than was indicated in the November forecast", with the risk of inflation becoming entrenched now lower. The statement notes that "the possibility of the policy rate being cut during the first half of the year cannot be ruled out".

• Rates were held at 4.00% in a unanimous decision amongst the Executive Board.
• SEK has knee-jerked weaker as a result (around 0.2% weaker versus EUR), with a lower-than-expected increase in the pace of QT (to SEK6.5bln/month ) also factoring in.
• With respect to QT, the analyst median of the previews we had read looked for an increase to SEK7bln, with a SEK5bln-SEK8bln range. Of the SEK6.5bln/month (which was in line with the MNI Markets team expectation), SEK5.7bln will be nominal government bond sales, with linkers making up the rest.
• Most analysts had already expected the policy rate to be cut in H1 2024, in some cases as early as May.
• The Riksbank acknowledges that CPIF ex-energy has evolved below the November forecasts, creating "greater certainty in the assessment of inflation".
• Despite this, monetary policy needs to be "adjusted cautiously", with risks to the outlook including "renewed supply shocks resulting from the geopolitical unease, company pricing behaviour not yet having normalised, or the krona weakening substantially once again".
• The press conference (in Swedish) will give more colour at 10:00GMT / 11:00CET