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10 Feb 2015
Will the Riksbank expand its monetary policy? – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, notes that in the December meeting the Riksbank did warn of further measures to expand its monetary policy, and with CPI at 0.3%y/y, the central bank will stay on heightened alert.
Key Quotes
“The first Riksbank policy meeting of the year is scheduled for February 12. The market consensus is in favour of steady policy, though a minority of analysts are calling for a rate cut.”
“The Riksbank used the element of surprise last year and slashed the repo rate to zero. In doing so, the Riksbank put itself ahead of the curve.”
“EUR/SEK trended higher through most of last year which afforded the cross rate protection against the EUR’s recent aggressive broad based decline.”
“The weaker tone of the SEK has contributed to some recent upside surprises in CPI inflation data which suggests that there is little reason for the Riksbank to rush into further policy measures.”
“That said, CPI inflation is still at -0.3% y/y, suggesting that the Riksbank likely remains on heightened alert.”
“In its December policy statement the Riksbank stated that inflation is”too low”. That said, it outlined its first defence against weak price pressures as a postponement of the first rate hike of the cycle which in December was judged as being H2 2016.”
“However, the Riksbank also warned that it is “also preparing further measures that can be used to make monetary policy more expansionary. Such measures, were they necessary, could be presented at the next monetary policy meeting”.”
Key Quotes
“The first Riksbank policy meeting of the year is scheduled for February 12. The market consensus is in favour of steady policy, though a minority of analysts are calling for a rate cut.”
“The Riksbank used the element of surprise last year and slashed the repo rate to zero. In doing so, the Riksbank put itself ahead of the curve.”
“EUR/SEK trended higher through most of last year which afforded the cross rate protection against the EUR’s recent aggressive broad based decline.”
“The weaker tone of the SEK has contributed to some recent upside surprises in CPI inflation data which suggests that there is little reason for the Riksbank to rush into further policy measures.”
“That said, CPI inflation is still at -0.3% y/y, suggesting that the Riksbank likely remains on heightened alert.”
“In its December policy statement the Riksbank stated that inflation is”too low”. That said, it outlined its first defence against weak price pressures as a postponement of the first rate hike of the cycle which in December was judged as being H2 2016.”
“However, the Riksbank also warned that it is “also preparing further measures that can be used to make monetary policy more expansionary. Such measures, were they necessary, could be presented at the next monetary policy meeting”.”