MNI BRIEF: Riksbank Minutes Show Wariness Over Further Cut

The June Riksbank Executive Board minutes showed that the five members were united in supporting both the 25 basis point policy rate cut to 2 per cent and the accompanying forecasts which put an even chance of a futher cut.

First Deputy Governor Anna Seim said that although there were factors that could push up on inflation, such as supply chains shocks or a weaker krona, none of these had materialized and the risk was that weaker demand caused by uncertainty would create low inflation. This could lead to at  least one more rate cut.

It was "more likely that the rate will be cut one more time than be raised," First Deputy Governor Anna Breman said. Governor Erik Thedeen cautioned on over-interpreting a rate-cut possibility.

Seim said that 2.25%, the mid-point of the 1.5  to 3% neutral range, was "a reasonable estimate that serves as an anchor" while Deputy Govenor Per Jansson said that "policy needs to be more expansionary for a time" before returning to that anchor.