Riksbank Preview: Forecasts from seven major banks, 50 bps, but the peak is not far off

The Riksbank is set to announce its Interest Rate Decision on Thursday, February 9 at 08:30 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of seven major banks for the upcoming central bank's meeting. 

Riksbank is expected to hike rates by 50 basis points to 3%. At the last policy meeting on November 24, the Riksbank hiked rates by 75 bps. 

TDS

“We look for the Riksbank to deliver a 50 bps hike, in line with market pricing but above the 28 bps implied by the Bank's rate path. While growth has been weak and core CPIF came in roughly as the Bank expected, a hawkish shift from the ECB and a much weaker SEK has put notable pressure on the Bank. We then see two more 25 bps hikes to bring the policy rate to a 3.50% terminal.”

ING

“With new Governor Erik Thedeen warning against recent SEK weakness, and the Riksbank saying in the past that it wants to stay ahead of the ECB in its tightening cycle, we expect a 50 bps rate hike. Nevertheless, with the housing market under pressure, we think we’re nearing the top for Swedish rates. We expect one further 25 bps hike in April, marking the top of the cycle.”

Swedbank

“We expect the Riksbank to raise the policy rate by 50 bps to 3%. And the rate path is likely to be bumped up to signal another 25 bps hike later this spring. This will be Erik Thedéen’s and Aino Bunge’s first meeting, which adds to the uncertainty. Our forecast is that given the high inflation, the ECB’s rate hike plans and the weak Krona, the Riksbank will continue to rise by 25 bps both in April and June.” 

Nordea

“We expect the Riksbank to increase the policy rate by 50 bps to 3% and signal at least one more rate hike ahead by 25 bps. A weak SEK is creating headaches for the Riksbaken and adds to upside risks on SEK rates. We think an upward sloping policy rate path into the second half of the year with no rate cuts may be needed to guard against further SEK weakening. Looking at what markets currently expect, pricing for the next two meetings is reasonable, but rate cuts are discounted too early.”

Danske Bank

“We look for a 50 bps hike.”

SocGen

“Sweden’s Riksbank is playing catch up (like the ECB) and will probably tighten by 50 bps despite the danger of the economy entering a recession this quarter.”

Wells Fargo

“For February, we expect the Riksbank to raise its repo rate 50 bps to 3.00%. Moreover, given how elevated inflation is, we now also expect the Riksbank to hike its rate another 25 bps to 3.25% in April, above our previous forecast peak for the policy rate of 3.00%. The Riksbank also publishes updated projections, including for economic growth, inflation and the policy rate path, which should also provide an indication of whether the central bank believes interest rates will need to be raised by more than previously anticipated.”