Riksbank: Don’t expect any major shifts - TDS

Analysts at TDS suggest that the market reaction to this morning’s Riksbank decision is a bit hard to gauge, especially with a likely lack of liquidity ahead of the ECB decision later in the day.

Key Quotes

“While the most recent Swedish inflation print surprised to the downside, the underlying trend is looking a bit more durable. We don’t expect any major shifts from the Riksbank just hours ahead of the big ECB decision, but there seems to be some risk of another upgrade to medium-term Swedish inflation forecasts, which could be a hawkish surprise. However, the Riksbank also has to make a decision on its foreign exchange intervention mandate today as it expires this month, and we think that the mandate will likely be renewed. That leaves the risk of a knee-jerk move higher in EURSEK on initial headlines when markets see the words “foreign exchange intervention,” but a reversal lower if the inflation forecasts are indeed a bit more upbeat than consensus is looking for.”