Riksbank confirms a hike is coming – TDS

Analysts at TD Securities explain that the Riksbank largely repeated its September policy messaging, indicating that they expect to raise the Repo Rate in "December or February".

Key Quotes

“The vote was 4-2 in favour of no change, as expected.”

“Despite worries that the Riksbank might push back against market pricing strongly favouring a December hike, the Riksbank left its Repo Rate forecast unchanged, and included a box in the MPR titled "What usually happens when the repo rate is raised?", suggesting they are serious about a near-term hike.”

“The key economic forecast variables were left unchanged, with the Repo Rate and inflation forecasts the same as in September. However, while noting some positive developments in inflation, the Riksbank did downgrade their growth, labour market, and productivity projections, and lowered the expected pace of appreciation in SEK going forward.”

“We expect a 25bps Repo Rate hike in December and a single hike next year in July as the Riksbank remains characteristically cautious.”

“FX: Market reaction has been fairly well-contained ahead of tomorrow's ECB decision, but NOKSEK rose about 0.3% higher after the decision.”