Analysts at Nordea Markets point out that in the February meeting of Riksbank, it refrained from sending any new policy signals, which prompted a slight hawkish surprise given the gloomy sentiment that was built up ahead of the meeting.
Key Quotes
“The Riksbank didn’t prolong the currency intervention mandate, and while this has no real practical significance, it is a signal to markets that the Riksbank may care a little less about the SEK level going forward.”
“We still warn against extrapolating the slightly hawkish take-away, as the Riksbank remains too optimistic on growth and private consumption for instance. This could prompt a downward revision of the rate path in April, if the Riksbank is proved wrong. Furthermore, the decision on how to handle the maturing Dec-2020 bond on the balance sheet will likely be taken in April. If the Riksbank mirrors its pre-reinvestment actions head of the Mar-2019 bond redemption, then they will decide to pre-reinvest the maturing bond in Dec-20 already now. This would leave an expanding balance sheet for the rest of 2019 and until Dec-2020. Not a hawkish nor SEK positive scenario.”
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