The MNB cut its base rate by 25 basis points to 5.50 per cent after July inflation fell to 1.2 per cent. The Riksbank held at 1.75 per cent and kept an autumn increase in play. The MNB expects price growth to remain below target, while several inflation measures in the Riksbank minutes exceeded forecasts, leaving the two institutions facing opposite policy directions.
The MNB Monetary Council cut the base rate by 25 basis points to 5.50 per cent with effect from 26 August. It lowered the overnight deposit rate to 4.50 per cent and the overnight collateralised lending rate to 6.50 per cent. July inflation was weaker than expected at 1.2 per cent and core inflation was 1.9 per cent. The MNB expects price growth to remain below its 3 per cent target through next year.[1]
The Riksbank held its policy rate at 1.75 per cent on 19 August. In minutes published on 25 August, Anna Seim said an increase may be needed in the autumn, while Aino Bunge retained the roughly 50 per cent probability in the June rate path. Monthly inflation excluding energy and temporary fiscal measures was 0.6 per cent, against the Riksbank’s 0.2 per cent July forecast.[2]
The MNB expects inflation to remain below target for the rest of this year and throughout next year, returning to 3 per cent in the first half of 2028. The Riksbank minutes say that CPIF inflation adjusted for temporary fiscal measures reached 2.2 per cent in July and exceeded the June forecast. The MNB will use its September Inflation Report to set the next step, while Per Jansson said he could support increases larger than the usual 0.25 percentage points if needed.[1], [2]
