Sveriges Riksbank left its policy rate unchanged at 4.00% at its February 2024 monetary policy meeting, but the Swedish central bank signalled that a rate cut could come as early as the first half of the year if the disinflation trend was sustained.
Sweden's CPIF inflation rate fell to 2.3% in December 2023, against the Riksbank's 2% target. The Riksbank's tightening cycle had pushed the policy rate from near zero to 4.00% in about a year and a half.
DISINFLATION OPENS DOOR TO EASING
The Riksbank's February statement stopped short of a commitment, saying that a cut during the first half of the year could not be ruled out. Policymakers acknowledged the improved inflation outlook and stated that the board was prepared to consider reductions to the policy rate in 2024 if incoming data confirmed that price pressures were durably subsiding.
The central bank emphasised that monetary policy needed to be adjusted cautiously, citing risks such as renewed supply shocks, company pricing behaviour not yet having normalised, or a substantial weakening of the krona.
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