According to Jonas Goltermann, developed market economist at ING, Riksbank decision to raise interest rates for the first time since 2011 seems a close call, as the policy statement and accompanying forecast point to an even more cautious stance.
Key Quotes
“It looks to us as though policymakers felt compelled to deliver a rate hike after a long series of delays rather than disappoint again, but are unsure about the path forward.”
“The new interest rate forecast anticipates the next rate hike will come in Q3 next year (at either the July or September meeting). Further out, the path shows two hikes in 2020 and 2021 respectively. This amounts to removing a full rate hike compared to the previous forecast.”
“With downside risk to inflation and a worsening outlook for both the domestic and global economy, it would not be surprising to see the next rate hike pushed into Q4 next year or even 2020. And there is a decent chance that this turns into a ‘one and done’ scenario.”
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