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Jonas Goltermann, developed market economist at ING, notes that the Riksbank left the policy rate unchanged at -0.25% and also maintained the same interest rate forecast as in December.

Key Quotes

“Today’s statement is probably a little more on the hawkish side than expected. While the Riksbank acknowledged greater uncertainty around global growth and domestic conditions, policymakers still believe ‘the picture of strong economic activity remains’. And if anything, the language on the inflation outlook has grown more confident, with the Riksbank increasingly certain that inflation will stabilise around the 2% target.”

“The most notable aspect of the statement is the absence of the usual reference to avoiding excessive SEK appreciation (which has been in the statement in one form or another for years), and the decision not to renew the mandate for FX intervention (never used, but intended as a signal to limit krona appreciation).”

“Today’s shift is perhaps no more than an acknowledgment that the environment has changed.”

“We still see the Riksbank hiking again towards the end of the year, though risks are skewed towards a delay as our forecast for both growth and inflation is less optimistic than the Riksbank.”