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James Rossiter, senior global strategist at TD Securities, explains that on the expected lines, Sweden’s Riksbank left policy on hold today, and made few changes to its economic forecasts.

Key Quotes

“The Riksbank chose not to renew its exchange rate intervention mandate, on the basis that circumstances have changed significantly since it was first introduced: the Riksbank is now hiking, inflation expectations have re-anchored, and inflation is expected to remain very close to target over the forecast.”

“The Riksbank noted that the effects of the new Swedish government on the economy could not yet be determined. While they acknowledged some small policy changes that could support inflation “marginally” over the forecast, they chose to wait until later to incorporate policies on labour, housing, and migration into their projections.”

“The sell-off in SEK looks to be overdone, and we see EURSEK ripe for a reversal lower. The absence of notable downward revisions to the forecasts helped fuel this, and the currency pair has fallen about 0.4% so far on SEK appreciation.”