The Riksbank appears not to be in any rush to withdraw stimulus. Readings of underlying inflation remain low. Given policy-makes focus on the EUR/SEK exchange rate, this will bring some challenges for the Riksbank particularly if the ECB pushes back on taper talk at its June 10 meeting. Therefore, economists at Rabobank expect the EUR/SEK pair to move marginally lower to 10.00 in the coming months.
“The market will have to wait until July 1 for the next Riksbank policy meeting. If the recent improvement in Swedish economic news is sustained in the coming weeks, it is likely that by then the market will be speculating that the Riksbank may start stepping back from its uber-accommodative tone.”
“Given that Sweden is a small, open economy, policymakers are likely to be wary about adjusting policy too independently of the ECB for fear of an adjustment higher in the value of SEK vs. EUR. This is likely to be unwanted unless inflation becomes a concern.”
“While the Riksbank is likely to trend carefully, we see scope for a modest improvement in the value of the krona and look for a move to EUR/SEK 10.00 during the summer.”
