Riksbank to hike despite soft inflation and rallying krona
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4 itemsRiksbank to hike despite soft inflation and rallying krona
Riksbank to hike despite soft inflation and rallying krona
The Riksbank's anticipated 25bps rate hike on November 4 aligns with its ongoing tightening bias, despite recent soft inflation and a strengthening krona. Per the full note from ING, inflation readings have been weaker than forecast, yet macro conditions—particularly energy price pressures—support further monetary tightening. This move could signify the Riksbank's strategic intent to pre-emptively combat inflationary risks stemming from a robust economy. Notably, amidst fluctuating market expectations, the current sentiment is shifting; swaps suggest diminishing prospects for the hike, now at 15-18bps, compared to earlier expectations of 22-24bps. The desk observes that the Riksbank's commitment to maintain a tightening stance may be more relevant than the immediate downturn in inflation metrics. This outlook will be crucial for traders, especially leading into year-end positioning and January assessments.