MNI Riksbank Preview - February 2024: QT Acceleration Eyed

EXECUTIVE SUMMARY:

• The Riksbank is widely expected to leave the policy rate on hold at 4.00% in its first meeting of 2024, with most focus on whether (or, more likely, by how much) the pace of government bond sales will be increased.
• The MNI Markets Team expects no change to the policy rate and an increase in the pace of bond sales to around SEK6.5bln/month.
• Of the analyst previews we have seen, there is a unanimous expectation for rates to be held steady. With respect to QT, all but one analyst that expressed a view expect an increase from the current pace of SEK5bln/month, with estimates ranging from SEK5bln (no change to the current pace) to SEK8bln. The median estimate is SEK7bln.
• A larger-than-expected QT acceleration would likely see the SEK strengthen, particularly given the Riksbank’s view that the policy has already been SEK-positive. However, this may be offset by any softening in the guidance surrounding upside policy rate risks. We will likely need to let the dust settle on the policy announcement and the press conference to see how markets have digested the decision in its entirety.

MNI Riksbank Preview - 2024-02.pdf