Riksbank Preview: Five major banks expectations

The Riksbank will announce its Interest Rate Decision on 1 July at 07:30 GMT. The market consensus is for the Riksbank to stay on hold and as we get closer to the release time, here are the expectations forecast by the economists and researchers of five major banks regarding the upcoming central bank's meeting.

Danske Bank

“We doubt there will be any significant market implications. Firstly, we expect the Riksbank to return to normal forecasting procedures, leaving the April ‘scenarios’ behind. As both economic scenarios were very gloomy to say the least – and as the government, the NIER and other authorities have produced less pessimistic scenarios in between – we expect an upward revision in line with these. When it comes to inflation, the Riksbank will have to make a significant downward revision to CPIF ex Energy, which is very far off track. CPIF less so, as energy prices have soared in June, pulling it towards the Riksbank’s scenarios. Secondly, when it comes to monetary policy action, we do not expect any this time. We expect the repo rate will remain unchanged at zero. We do not expect any new ‘acute’ loan facilities. In terms of QE, it is probably too early for the Riksbank to detail bond purchasing plans after October. The table on the right shows the current status of QE in different instruments. We believe there is a tiny probability that it may announce how to proceed with the purchase of corporate bonds, however. Hence, we assume it will be a fairly ‘boring’ message. However, when it comes to the Riksbank you never know. This institution can be unpredictable.”


“The Riksbank is likely to join the streak of relatively hawkish European CBs after the BoE and Norges recently. We look for an upgraded 2020 GDP forecast after stronger H1 data, though the Riksbank may see a more drawn out recovery instead. We also look for the Riksbank to wait until Sept to expand QE, and for the policy rate projections to show the zero through end-2022.”


“We are not looking for any major surprises and interest rates should remain unchanged and the QE purchases are likely to remain in place. There is an outside risk that the Riksbank will follow the Norges Bank and pencil in a modest hike at the end of the forecast horizon. Should this be the case, the SEK reaction should be positive but as was the case for NOK (and its reaction to the NB forecast) it should be a one-off as such, a soft guidance on easing would be theoretical (ie end 2022/ early 2023) and not imminent. Thus having a limited positive impact on the currency.”

Credit Suisse

“We see risks that the Riksbank decision outcome might prove dovish even versus the current set of expectations. In particular, we see a risk that the bank strikes a dovish tone in its forward guidance and that this in turn reinforces pricing for negative rates.”


“We expect a rate path with the repo rate stuck at 0% all through the three-year forecast, possibly with a cosmetic increase at the end of the period. At the same time the door will be kept open for a rate cut if needed when the economy starts to recover. We believe that the purchase programme will be left unchanged for now but expanded possibly at the September meeting but more likely in November. The market is only discounting a very small probability of a rate cut and market reactions should thereby be minor if our scenario is correct.”


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