Next week, on 23 November, the Riksbank is announcing the decision from yet another policy meeting. Unlike the meeting in September, where a hike was widely expected, the market is only assigning a 30% probability for a 0.25% rate hike. Looking at pricing beyond this meeting, it is clear that next week is about setting the peak in the cycle and whether it will be 4.00% or 4.25%. Gradually, with the start in the summer 2024, rate cuts are being priced in, down to a 3.00% policy rate by Q3 2025. When we published this update last time, quite a lot happened, with both Fed and ECB pausing its rate hiking cycles. The implication on Riksbank expectations has been noticeable, with 2025 forwards down some 0.50%. For those interested to figure it out on your own, how to calculate what is being priced in, reach out and we gladly pass along our Excel sheet.
