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The Riksbank left its repo rate forecast unchanged at its latest meeting and there was little expectation from consensus for substantial revisions to the outlook, but the decision was interpreted as more hawkish by the market, according to analysts at Nomura.

Key Quotes

“Firstly, the unchanged repo rate path signals that the Riksbank is – for now at least – sticking with its communication that the first hike will come in 2018, despite the ECB’s commitment to keep rates unchanged through the summer of 2019.”

“Second, inflation forecasts were also upgraded – largely on the back of higher oil prices and a weaker than expected currency.”

“Third, Martin Floden entered a reservation against the repo rate projections – advocating a 0.25% increase this year (in September or October) rather than the 7bp currently implied in Q4.”

“We do not view latest meeting as a medium-term game-changer. However, tactically, we see scope for SEK-positive themes to emerge in coming weeks.”