Riksbank could resume its easing in December – Danske Bank

Senior Analyst at Danske Bank Morten Helt expects the Nordic central bank to loosen its monetary policy further at its meeting in December.

Key Quotes

“We have changed our call on the Riksbank. So far, our call has been that the Riksbank is done with cutting rates, basically because we do not see the point in lowering the repo rate further”.

“However, the Riksbank seems to be of a different opinion. In the latest monetary policy report it lowered the rate path, showing a 6bp easing bias for the December meeting”.

“Assuming that in this negative rate environment the Riksbank moves in steps of 10bp, this indicates a 60% probability of a 10bp rate cut. Considering that our inflation forecast remains on the low side of the Riksbank’s, we draw the conclusion that a rate cut is likely to be decided at the December meeting”.

“A rate cut that is not fully priced in would provide a headwind for the krona with the risk of further gains in EUR/SEK, even though we note that it has gone a far way already”.