There are big movements in the portfolio at the moment

Yesterday, the Swedish krona (SEK) strengthened further against the euro (EUR) by ¢0.1, which is ¢0.01 higher than the previous strongest days of 2024, February 6 and June 10. The SEK also strengthened against the USD, indicating a positive trend for the SEK. Since July 25, the SEK has strengthened against the USD by ¢0.3.

At the latest cut in the policy rate, which was made on May 15, the Swedish central bank AKA Riksbanken highlighted a number of risk factors that they believe could drive inflation in Sweden again. Riksbanken mentioned the strong American economy, the geopolitical unrest and the Swedish krona exchange rate. Riksbanken has also emphasized on several occasions that a central point for further reductions in the policy rate is the value of the Swedish krona.

With the weak US unemployment figures presented at the end of last week followed by the strengthened krona exchange rate, Riksbanken should cut the policy rate by 25 basis points at the next monetary policy meeting on 20 August. The only thing that has not improved, from a Swedish perfective, is the geopolitical unrest.

July's inflation rates from the Statistics Authority (SCB) are announced in mid-August, i.e. next week. If Sweden's inflation for July turns out to be below the inflation target of 2 percent again, I believe that Riksbanken must lower the policy rate by 50 points.