“We look for the Riksbank to keep its policy rate forecasts unchanged from those published in April, with a rate hike still forecast for Q4 of this year,” argue TD Securities analysts in their Riksbank preview.
Key quotes
“However, with the latest Bloomberg survey showing analysts split almost 50-50 around expectations of a rate hike by year-end, we think that markets may see this in a hawkish light. While not quite as hawkish as their Norwegian peers, a rate hike before year-end would still leave the Riksbank raising rates well ahead of the ECB.”
“FX: A more-hawkish tone next week could support SEK gains in the wake of the meeting, but we think the risk/reward of pre-positioning for such a move is not very attractive. With the Riksbank remaining stubbornly dovish in recent months and the overall financial landscape leaning in a risk-averse direction, we think markets will wait for a clear confirmation from policymakers before putting SEK back on a more positive path.”
“Rates: The front-end of the SEK curve is well priced for a 10bp rate hike in December 2018. The recent ECB led rally in SEK rates seems overdone, in our view. We tactically maintain a bearish stance on SEK rates in near term.”
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