SEK to ease again rapidly if Riksbank disappoints with less than 50 bps – Commerzbank

Following the inflation data for December it is going to get tight for the Riksbank when it comes to sticking to its current rate path, according to economists at Commerzbank.

It is going to get tight for the Riksbank and SEK

“Inflation rate rose to a staggering 10.2% and was thus well above market expectations. The core rate excluding energy too surprised on the upside with 8.4%, albeit not as clearly. It nonetheless shows that price pressure exists on a broad basis. That means that the Riksbank will probably have to adjust its inflation projections to the upside again.”

“The market certainly sees the chance that the Riksbank might become more hawkish and after November is partially pricing in a further 50 bps to then 3% for February. If the Riksbank disappoints these expectations, SEK is likely to ease again rapidly, as at this stage the Riksbank is likely to be dropping behind the curve from the market’s point of view and will come across as hesitant in its fight against inflation compared with the ECB.”