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EUR/SEK moved higher after the Riksbank kept the policy rate unchanged at 4.00%. Economists at Commerzbank analyze the pair’s outlook.

The Riksbank does not have the guts

The Riksbank decided against hiking its key rate and instead left it unchanged at 4%. It reserves the right to take action again at the beginning of next year. It continues to expect that the key rate will peak at 4.10%. It raised the inflation projections for 2023 slightly, whereas it lowered the ones for 2024. That means that in the end, the Riksbank remains cautiously restrictive.

The market seems to once again question the Riksbank’s determination to take action against the risks of inflation. Under these circumstances, I can imagine that SEK will retrace some further gains it had recorded since early November. Unless the Riksbank counters this with FX sales. On Thursday, at least, it looked like an invisible hand had capped EUR/SEK slightly above 11.46.

 

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