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A rate hike by the Swedish central bank at some point in Q4 still remains a chance, according to Analysts at Danske Bank.

Key Quotes

“The Riksbank cut GDP growth slightly and raised the CPIF inflation path due to higher energy prices and a weaker krona – quite minor adjustments overall. It made a small upward revision to the core CPIF excl. Energy too, but not enough to change the annual average”.

“The Riksbank still appears to be concerned about slowing services prices, which were driven higher in 2017 due to special factors. With regard to the GDP outlook, it says that growth was temporarily weak at the beginning of the year. We are slightly surprised to see that it remains optimistic about the outlook for the rest of the year given that residential construction is affecting GDP significantly and the risk of a trade war”.

“This time, Deputy Governor Ohlsson was accompanied by Deputy Governor Flodén (as indicated in the April minutes) in dissenting from the repo rate path and both dissented from the extension of the FX intervention mandate. Naturally, the upcoming minutes will crucial in gauging the strength of the 4-2 majority”.

“We stick to our call that the Riksbank will postpone the first hike beyond 2018, although we see a small chance/risk it might move already in Q4″.