Thedéen Assigns Greater Weight To Activity Data In Determining Rate Cut Timing

EURSEK has not seen any notable reaction to the release of the Riksbank's Jan meeting minutes. Looking first at Governor Thedéen's comments, the dovish pivot made at last week's decision is evident.

• Thedéen notes that the policy rate has very likely peaked, and that it should eventually "be possible to gradually ease monetary policy".
• He points to softening inflation momentum as the primary reason for opening the door to rate cuts, but still notes risks to the outlook arising from a weaker krona and geopolitical tensions in the Middle East and Russia/Ukraine. In this light, he is still prepared to hold the policy rate at "contractionary level for a longer period of time".
• Thedéen does not assign a timeframe to when rate cuts will begin, but interestingly says that he will "give slightly greater weight to how activity in the Swedish economy is developing" in addition to assessing inflation dynamics. This may assign further importance to activity data for markets in the coming months.
• With respect to QT, little colour is given on the decision to increase bond sales to SEK6.5bln/month (rather than a higher or lower amount).