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Mats Hydén, analyst at Nordea Markets, suggest that they are expecting no change to the Riksbank policy rate at the announcement 25 April, but a slight downward revision to the rate path near-term and a risk for less bond buying.

Key Quotes

“The market is currently very soft in its pricing of the Riksbank’s future policy path. It is very unlikely that the Riksbank will revise its rate path downward all the way to where the market is. The risk-reward for betting on a soft rate decision is in our view thus poor.”

“One of the more interesting scenarios, although not our main scenario, is the one in which Riksbank is very clear about an intention to hike in September or October while making a major flattening of the rate path 2020+. This would be similar to what the Bank of Norway did recently, and it must surely be interpreted as change to the “reaction function”. It is unusual that the Riksbank uses kinks on the rate path as forward guidance and it would be a very clear signal that it would take a lot to derail yet another hike.”

“Unfortunately, this scenario is also very difficult to map onto possible market reactions. Since a kinked rate path would contain additional hikes while also signaling a changed reaction function it seems reasonable to us that SEK rates increase relative EUR rates in this scenario. But also, in the other scenarios above, the market could very well interpret the Riksbank as relatively hawkish compared to Fed or the ECB.”