Sweden’s Riksbank Says Repo Rate Cut Can Come ‘at Any Time’

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Sweden’s central bank said it doesn’t need to hold a scheduled meeting before announcing a rate cut, signaling that efforts to predict policy steps based on the bank’s calendar are pointless.

The Riksbank “has the possibility to make monetary policy decisions at any point in time,” Tomas Lundberg, a spokesman for the Stockholm-based bank, said in an e-mailed response to questions on Tuesday. Such a step “doesn’t have to take place at a pre-announced executive board meeting or a monetary policy meeting.”

Many economists had expected the Riksbank to announce a rate cut on Monday, in connection with a scheduled executive board meeting posted on its calendar. Its failure to deliver prompted conjecture that a cut may come on June 1, the next time the board officially meets. Speculation the Riksbank needs to cut its benchmark repo rate from minus 0.25 percent has grown after a report last week revealed Swedish consumer prices were again starting to decline.

“If and when the executive board makes a monetary policy decision, we will as per usual communicate this as clearly as possible,” Lundberg said.

But the approach threatens to confuse analysts trying to interpret the bank’s signals.

“They’re straying away a bit from what’s been the Riksbank’s beacon of transparency, openness, clarity, predictability,” Robert Bergqvist, chief economist at SEB AB and a former researcher at the Riksbank, said by phone. Instead, “they’re moving toward short-sightedness and surprise,” he said.

ECB Stimulus

The Riksbank is struggling to fight persistent consumer price declines as its efforts to ease policy are drowned out by much bigger stimulus programs elsewhere in Europe. The European Central Bank’s historic bond-purchase program has put pressure on monetary regimes outside the single currency bloc, where exchange-rate moves are pummeling inflation.

Sweden’s krona rose 0.5 percent against the euro on Monday. It retraced earlier gains of as much as half a percent on Tuesday and traded 0.1 percent higher as of 2:40 p.m. in Stockholm, the day’s smallest increase against the euro after the krone of Denmark, which enforces a peg. Against the dollar, Sweden’s krona sank 1.5 percent.

Governor Stefan Ingves, speaking on Monday at a seminar arranged by Swedbank AB, said it is “important” that the krona doesn’t appreciate “too quickly.” The Riksbank would prefer for the exchange rate to stay “roughly where it is” for some time, he said.

‘Very Sensitive’

The bank “has been very sensitive to news that undermines the rise in inflation,” Raphael Brun-Aguerre, an economist at JPMorgan Chase & Co. in London, said in a note on Monday.

He estimates the Riksbank will lower its policy rate by 10 basis points to minus 0.35 percent “before or at the July meeting.” The last time the Riksbank cut between scheduled rate meetings was in March. That was one month after it announced its intention to allow policy moves between its six scheduled rate meetings a year.

Consumer prices dropped 0.2 percent in April from a year earlier, when the median estimate in a Bloomberg survey of economists pointed to a 0.2 percent increase, a May 12 report showed. The Riksbank targets 2 percent inflation. Last month’s annual price drop follows a spate of deflation that dragged on from August 2014 through January.

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