Riksbank unanimously expected to remain on hold - TDS

The highlight today the Riksbank’s rate decision and while rates are unanimously expected to remain on hold, the big question is whether or not the Riksbank decides to extend its QE programme into 2018, suggests the research team at TDS.

Key Quotes

“Although it’s a close call, we do think that the Riksbank will finally bring its QE programme to an end, after the last couple of extensions have been 3-3 ties with Governor Ingves needing to case the tying votes.”

“We are looking for a 5-1 vote to end QE today and the decision will be followed by a press conference starting at 10am this morning. Beyond this, we think they are going to upgrade their inflation forecasts a bit over the next two years, and also nudge their policy rate forecasts higher over the 2019-2020 window. This should be taken fairly hawkishly overall as the Riksbank would be taking a big step in furthering its exit strategy.”

“Naturally, this suggests downside risks to EURSEK for today, but we are not entirely convinced that today will be the start of a broader downtrend. That may have to wait until January, as end-of-year trading conditions and deteriorating liquidity means we cannot rule out another spike above 10 over the next week or two.”