UBS Adds A 25bps Rate Cut Forecast to Sweden's Central Bank Meeting for September

09:22 AM EDT, 06/19/2025 (MT Newswires) -- The Riksbank cut its policy rate by 25bp to 2.0% on Wednesday as the central bank set a slightly accommodative policy stance on the back of a stalling Swedish growth recovery, said UBD.

The Risksbank revised down its growth and inflation forecast.

UBS had expected a later cut, seeing the Riksbank on hold on Wednesday and cutting in August when there might be better visibility on United States tariffs and European Union retaliation. Yet the Riksbank appears more worried about growth than the bank thought and as such opted for a more proactive approach.

While the cut itself was merely a question of timing, the Riksbank's new guidance is unexpectedly dovish as it opens the door to even more easing, stated UBS.

The Riksbank emphasized elevated uncertainty linked to U.S. tariffs and geopolitics and stresses data dependency, but nevertheless forecasts a policy rate of below 2% that "entails some probability of another cut this year."

As a consequence, UBS adds a 25bps rate cut to 1.75% in the September meeting after a pause in August to its forecast, contingent on ongoing growth weakness.

Since the bank estimates the neutral rate at 2.25%, this cut would bring the policy rate clearly into expansionary territory, and UBS thinks the Riksbank will hike again to 2.25% in Q3/Q4 2026, in lockstep with the European Central Bank.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.