MNI BRIEF: Riksbank Holds In August, Further 2025 Cut Possible

The Riksbank Executive Board left its policy rate on hold at 2.0% at its August meeting and said that it saw "some probability of a further interest rate cut this year," leaving its guidance essentially unchanged and leaving open whether it will cut in September.

The assessment of economic developments in the Monetary Policy Update provided some grounds to support the notion that the Swedish central bank has room to ease further, but the message was nuanced.

The board downplayed stronger-than-expected inflation outturns in June and July, saying its assessment was these were "due to temporary factors, and several indicators still support the view that inflation will fall back to 2%", but added that high inflation called for vigilance. It noted the weakness in economic activity, and said  "the recovery is sluggish."

The decision to hold was widely expected, as August is an interim meeting and the market's focus was firmly on the bank's messaging and data interpretation. (See MNI RIKSBANK WATCH: Hold Seen In Aug, Data Interpretation Key)