NATGAS: Denmark's Tyra Gas Field Reaches Full Operation

SEK saw a small knee-jerk weakening following the Riksbank decision, but EURSEK and NOKSEK have since moved off intraday highs.

• This reaction is unsurprising: The 25bp cut was not quite fully priced into markets as of yesterday, but the lack of forward guidance in the policy statement has countered some of the dovish signal from the rate decision itself.
• The tone of Governor Thedeen’s press conference at 1000GMT/1100CET will be key in shaping the overall reaction in the krona.
• Looking ahead, key focus will be on the January meeting minutes (released February 4). It will be interesting to see if the more dovish Executive Board members (Breman, Jansson and Bunge) signal a willingness to deliver more cuts in H1 ’25, which would be more aggressive than the December MPR rate path. 

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The Riksbank cut rates by 25bp to 2.25% as widely expected, in a unanimous decision amongst the Executive Board. There was some speculation that Deputy Governor Seim and Governor Thedeen may have opted to keep rates on hold, following cautious tones in the minutes and subsequent comments. The policy statement did not contain any clear forward guidance for the rest of this year, as we had expected in our preview.

Highilghts from the policy statement:

• “The forecast for the policy rate made in December essentially holds, but the Executive Board is prepared to act if the outlook for inflation and economic activity changes”.
• No clear forward guidance: “Monetary policy is forward-looking and guided by a tentative approach. The Riksbank will carefully evaluate the need for future interest rate adjustments, in light of the effects of earlier cuts and other information relevant to the outlook for inflation and economic activity”.
• “There is particular uncertainty regarding developments abroad, for instance with regard to economic policy in the United States and Europe and the geopolitical tensions.”