NEW YORK, February 2 (FinanceEnquiry.com) - Analysts at Morgan Stanley indicate that this week’s PMI data suggests upside risk to February call for an additional 25bp repo rate cut.

In a research note published yesterday, the analysts mention that PMI is unlikely to be a game changer for the Riksbank’s monetary policy meeting scheduled on February 16, as sentiment indicators were majorly in line with the expectations of soft economic activity in Sweden in coming months. The Executive Board is looking for indications as to where economic activity is heading before planning another precautionary rate cut, particularly in the light of recent industrial production and weaker-than-expected labor and trade markets data.
 
Moreover, the PMI in the manufacturing gained to a high level of 51.4 from a 48.9 in December. The comeback indicates that business sentiments in Sweden are gradually stabilizing. The surge in the PMI goes against the last week’s drop in NIER manufacturing, due to weaker production and demand conditions.  The analysts stay watchful about the NIER manufacturing and economic tendency indicator, as they tend to delay quarterly economic activity. More importantly, Riksbank employs both surveys interchangeably, leading to a drop in production and demand conditions in the NIER survey, which backs the analysts call for a lower repo rate in the near term.