MNI Riksbank Review: May '25 - Dovish Bias, But No Promises

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: MNI Riksbank Review - 2025-05.pdf

EXECUTIVE SUMMARY: 

• The Riksbank held rates at 2.25% as unanimously expected, and introduced a very slight dovish tilt to its guidance. The policy statement noted that “it is somewhat more probable that inflation will be lower than that it will be higher than in the March forecast. This could suggest a slight easing of monetary policy going forward”.
• We had expected a dovish guidance tweak in our preview, but overall view the May decision as fairly non-committal. 
• In the press conference, Governor Thedeen suggested that the dovish alternative scenario presented in the March MPR is somewhat more likely to play out than the hawkish scenario, but was “not at all certain” of another rate cut. Thedeen stated that the wording in the policy statement was intentionally vague.
• There was limited reaction in SEK crosses to the decision, with the signal provided not enough to move markets that already price in ~40bps of additional policy easing this year.
• We continue to view a June cut as in play, but such a move will be determined by the hard and soft data between now and June 18.