Analysts at TD Securities suggest that today’s Riksbank decision was largely in line with what they had expected to see, with the main takeaway being that plans to begin raising rates in Q4 2018 are still intact.
Key Quotes
“In fact, the policy rate projections were left entirely unchanged all the way through the forecast period out to 2021.”
“Looking at the macro forecasts there were no real surprises, with GDP revised down just a touch for 2018 (from 2.6% to 2.5%), as Swedish growth held up much better than what we saw across most of the rest of Europe through H1, and CPIF was revised a bit higher on a weaker krona and higher crude oil prices, so it’s now expected to hold above 2% for most of the next year.”
“The one surprise from today’s Riksbank decision was the decision to extend the FX intervention mandate, something that we think the Riksbank could have afforded to drop as it moves closer toward normalising rates, and with SEK already sitting at such weak levels.”
“Going forward, our view on the Riksbank is unchanged, where we still look for an initial 25bps rate hike in December 2018, but for inflation surprises to drive Riksbank policy.”
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