Three more Riksbank meetings and three more rate cuts
Aug 28 (Reuters) -The stage is set for further cuts in Swedish interest rates before the year is out, with the three remaining policy meetings expected to deliver a total reduction of 75 basis points, taking the key rate to 2.75%.
Swedish inflation is under control, there are signs of weakness in the labour market and the crown is benefitting from lower global interest rates. This dovish backdrop is reflected in the minutes from the Riksbank policy meeting this month, when the bank cut its key rate by 25 basis points to 3.5%.
There is a chance that the benchmark rate could end the year at 2.5%, with one of the remaining Riksbank meetings bringing a 50-basis point cut. The central bank had increased the number of policy meetings in 2024 to eight from five, allowing for faster 25-basis point changes in the key rate but a half-point move at the September 24-25 meeting should not be ruled out.
The crown has been on an upward trajectory versus the euro since basing at 11.7780 in July. EUR/SEK targets a 76.4% Fibonacci retracement level at 11.2944, taken off the 11.1450-11.778 June-July climb.
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EUR/SEK daily candle chart: https://tmsnrt.rs/4cZvrTP
(Peter Stoneham is a Reuters market analyst. The views expressed are his own)
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