Riksbank preview: Hold now, hike in November
At a Glance
The desk anticipates that the Riksbank will opt for a hawkish hold at its upcoming meeting, indicating a likely hike in November. Per the full note , while there is a possibility of a surprise hike on September 24, the Riksbank's current stance reflects its cautious approach to inflation dynamics and external market pressures. The expectation builds on signals of rising inflation due to energy price increases and a weaker krona, reinforcing the view that tightening is on the horizon in the coming months, possibly at the November or December meetings.
Key Takeaways
- 01Riksbank likely to hold rates at 1.75% in September, with a hike expected in November.
- 02Inflation is currently benign, but upward pressures are evident from rising energy prices.
- 03Current EUR/SEK consensus target is 1.075, with a range of 1.04 to 1.12.
- 04The outcome of the September meeting could set the tone for subsequent rate moves.
Full Analysis
What the desk is arguing
We expect the Riksbank to adopt a hawkish hold during its September 24 meeting, preparing the ground for a hike likely to materialize in November. This aligns with perceptions of mounting inflationary pressures amid rising energy costs and ongoing central bank tightening elsewhere, particularly from the ECB and the Federal Reserve.
A recent uptick in oil prices and expectations of a weaker krona support this argument. The current inflation reading of 1.3% (excluding energy) is still below the Riksbank's target, but with recent energy price trends, the central bank might be incentivized to adjust its policy stance to combat potential inflationary spikes.
Where it sits in our coverage
The desk's expectations align closely with current market forecasts. Our consensus target for EUR/SEK is 1.075, which falls within a range of 1.04 to 1.12. Specifically: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
While the desk's view leans toward the middle of this spread with a slight bullish tilt, it remains sensitive to the risk of deviations based on upcoming inflation data or further geopolitical developments.
How other firms see it
Most firms are aligned in their outlook, with jpmorgan backing upward motions in the SEK due to convincing inflation signals, while bofa presents a more conservative viewpoint, expecting the SEK to struggle against the EUR in the short term.
In particular, movements in related pairs such as EUR/USD and shifts in Federal Reserve policy could significantly impact SEK valuations and mirror Riksbank strategies going forward.
Market Implications
Traders should keep an eye on the EUR/SEK near the 1.075 level as a potential inflection point. Key developments from the Riksbank on September 24 could set the tone for positioning ahead of November's anticipated hike, influencing broader Scandinavian currency behaviors.
From the original
Articles Riksbank preview: Hold now, hike in November Published 11:37 Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download A surprise hike shouldn’t be entirely ruled out on 24 September, but we favour a hawkish hold instead, with strong hints that t
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