MNI Riksbank Preview - Mar '25: Time To Hold Fire

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: MNI Riksbank Preview - 2025-03.pdf

EXECUTIVE SUMMARY: Time To Hold Fire

• The Riksbank is widely expected to hold rates at 2.25% on Thursday, with increased domestic inflationary pressures driving a hawkish adjustment in analyst and market expectations since the January decision.
• The March decision includes an updated Monetary Policy Report and rate path projection. We think a flat path at 2.25% throughout the forecast horizon is most likely. Although the January and February inflation outcomes will have a net hawkish impact on the rate path, there are offsetting factors from the details of the reports, alongside soft activity signals to start the year and a much stronger-than-expected exchange rate.
• Additionally, we don’t think there is much to be gained from a communication standpoint in shifting the rate path up a few basis points. 
• The analyst previews MNI has seen unanimously expect the Riksbank to remain on hold at 2.25%. Of those who expressed a view on the March MPR rate path, most see a horizontal trajectory at 2.25% as the most likely outcome (in line with MNI’s view), with slight upside risks. 
• Most of a hawkish Riksbank pivot is already priced into markets. As such, we view the risks to the March decision for SEK FX as quite balanced.