As the dust settles on last week's Riksbank decision, we now see the Bank delivering one final 25 bps hike to a 4.00% terminal rate in September.

We believe the Riksbank will settle with just one more hike in this tightening cycle. Constructive inflation and wage developments, combined with Swedish households being particularly interest rate sensitive, argues for a more cautious approach to policy setting. Adopting a high-for-long approach, we expect the Bank to refrain from cutting rates until September 2024.

Risks are skewed to the upside though, with inflation and the Krona being particularly key in shaping the next couple of rate decisions.