The Bloomberg survey indicates that all but two forecasters are expecting a 25-bps rate cut from the Riksbank at the January 29 policy meeting, Rabobank’s FX analyst Jane Foley notes.  

EUR/SEK to trade at 11.40 in 3 months

“The Riksbank has slashed rates by 150 bps since last May and indicated at its December meeting that ‘if the (economic) outlook remains unchanged, the policy rate may be cut once again during the first half of 2025’. Despite this guidance, there is some speculation in the market that the Riksbank could announce two more rate cuts this year, with the second in March.”

“Consequently, while a policy change this week is unlikely to take the market by surprise, the bigger reaction is likely to come from the guidance provided by policy makers.  Although dovish guidance from the Riksbank would likely weigh on the SEK vs. the EUR in the near-term, the proximity of the end of Sweden’s rate cutting cycle and optimism that the economy is pulling away from recessionary conditions should provide support in the coming months.”

“We would be looking to buy the SEK on dips vs. the EUR and we maintain a 3-month forecast of EUR/SEK 11.40.”