Erik Thedéen: Monetary policy challenges in war related supply shocks
At a Glance
The desk posits that the ongoing war-related supply shocks are complicating monetary policy decisions, particularly for the Sveriges Riksbank. Per the full note source, Governor Erik Thedéen highlighted the difficulties central banks face in navigating inflationary pressures exacerbated by geopolitical tensions. This aligns with our view that the Riksbank may need to adopt a more cautious approach to interest rate adjustments, especially as inflation remains stubbornly high. With consensus targets for EUR/SEK reflecting a range of 1.04 to 1.10, the market is keenly watching for any shifts in policy direction that could impact currency valuations.
Full Analysis
What the desk is arguing
The desk argues that the Riksbank's monetary policy is increasingly challenged by supply shocks stemming from ongoing conflicts. Thedéen's remarks underscore the complexities of managing inflation while ensuring economic stability, suggesting that the central bank may lean towards a more cautious stance in the near term.
Supporting this view, Thedéen noted that inflation rates have been persistently elevated, necessitating a careful balance in policy adjustments. Recent data indicates that inflation in Sweden remains above the Riksbank's target, which could lead to a more conservative approach in upcoming meetings.
Where it sits in our coverage
Our consensus target for EUR/SEK is 1.075, with a range of 1.04 to 1.12. Notably, jpmorgan has set a target of 1.10 for March 2026, while bofa is more bearish, targeting 1.04 in the same timeframe.
This perspective aligns with the broader consensus, suggesting that while there is a general expectation for a cautious approach, there is still divergence among firms regarding the extent of potential currency movements.
How other firms see it
Firms like jpmorgan and citi are aligned with our cautious outlook, anticipating that the Riksbank will prioritize stability amid ongoing supply shocks. Conversely, bofa holds a contrary view, suggesting that the Riksbank may need to act more aggressively to combat inflation.
The trajectory of EUR/SEK will likely reflect these central bank dynamics, particularly as the Riksbank navigates its policy amidst external pressures. Additionally, the relationship between SEK and other Nordic currencies may also provide insights into regional economic stability.
What the calendar says
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What changed vs prior statement
- 01Shift in focus from general economic conditions to specific impacts of war-related supply shocks.
- 02No mention of "patient"; emphasis on responding to supply chain disruptions.
- 03No vote-record change.
From the original
Speech by Mr Erik Thedéen, Governor of the Sveriges Riksbank, at the Stockholm Chamber of Commerce, Stockholm, 22 April 2026.
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Erik Thedéen: Vulnerabilities and resilience in a new world order
The desk interprets Erik Thedéen's recent address as a pivotal moment highlighting the need for resilience in the face of a shifting global economic landscape. Per the full note [source], Thedéen emphasizes the vulnerabilities exposed by recent geopolitical tensions and the necessity for strategic investments in competitiveness and security. This aligns with our view that the SEK will face upward pressure as Sweden positions itself as a stable investment destination amidst global uncertainties. The consensus target for the SEK against the EUR is currently set at 1.075, with a range reflecting varying outlooks among major banks.