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Investing.com - UBS economists anticipate the Swedish central bank will implement a final 25 basis point interest rate cut to 1.75% at its September meeting, according to a research note released Thursday.
The forecast follows the Riksbank’s August 19-20 meeting, where board members assessed a temporary inflation increase while maintaining guidance that suggested "some probability of a further interest rate cut this year" remains in place.
UBS economists cautioned that if August inflation data fails to show core CPI slowing down, the expected rate cut would likely be delayed until November instead of occurring this month.
Current market pricing reflects expectations for 9 basis points of cuts at the September meeting and a total of 19 basis points of cuts by year-end, indicating traders are not fully convinced a complete 25 basis point reduction will materialize this month.
UBS maintains a structurally bullish outlook on the Swedish krona, targeting EUR/SEK at 10.90 by the end of the third quarter and 10.75 by year-end, while noting that any upside inflation surprise would likely cause rates markets to reduce expectations for cuts and potentially push EUR/SEK further below 11.00.
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