Economists at Rabobank expect the Riksbank to hike its policy rate by 50 basis points (bps) at Thursday’s meeting. Nevertheless, this move it is improbable to lift the krona in the short-term.
“We expect that the Riksbank will opt for a 50 bps move tomorrow, not least to prevent the value of the SEK plunging (a situation which could worsen the inflationary outlook). However, it is possible that the Riksbank’s window of opportunity for rate hikes could be shorter than it appeared in the spring.”
“An ‘as expected’ 50 bps move may not be sufficient to inject much strength into the SEK near-term.”
“On balance we expect EUR/SEK to edge back towards the 10.40/10.30 area on a three to six-month view.”
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