BUZZ-COMMENT-Riksbank's 175-bp easing cycle could still have more to go

Jan 30 (Reuters) - The Riksbank suggested its easing cycle had ended after Wednesday's 25-basis point rate cut, striking a more hawkish tone than expected, but there may be scope for one more cut if inflation remains at or below 2.0% heading into the May policy meeting.

Swedish flash growth numbers for the fourth quarter of 2024 were slightly below the Reuters consensus call and highlighted the sluggish nature of the economic recovery.

The Swedish central bank wants to see the full impact of its 175-basis point easing cycle on growth, which has allowed inflation caution to creep back into the policy equation.

The Riksbank has assessed that inflation is well balanced but that commodity prices have been on the rise, which argues the case for a more hawkish stance.

The crown has remained stable within a range against the euro, and our outlook on inflation is less bullish, while our growth forecast is more subdued compared to the Riksbank’s. Consequently, we believe that an additional rate cut in May should not be dismissed.

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