Danske Bank analysts note that the Riksbank stole the limelight in Scandinavia yesterday as on the back of weakening growth, higher unemployment and geopolitical turbulence internationally it was widely expected that the Riksbank would delay the next hike, but it did not and still said that a hike is to be expected around the turn of the year.
Key Quotes
“It lowered the rate path by up to 50bp. In many ways this resembles its reaction function in 2011 when Europe was heading into another crisis. In September 2011 the Riksbank acknowledged that the growth outlook had deteriorated and lowered (flattened) the rate path.”
“Still it was signalling hikes through 2011-2012. Only three months later, in December, it delivered the first of a series of rate cuts. We do not think the Riksbank will hike this time around either and keep our forecast that the Riksbank will cut rates in Q1 next year.”
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