Riksbank Preview: Here comes Stefan Claus – TDS

Analysts at TDS expect the Riksbank to leave rates unchanged on Wednesday and vote 5-1 to bring an end to its QE program, as it takes a big step in its exit strategy and moves closer to the point of raising rates.

Key Quotes

“We look for the Riksbank’s inflation forecasts to edge a bit higher over 2018-19, and for policy rates to be nudged a bit higher over 2019-20. This should yield a hawkish market reaction.”

“FX Strategy: If the Riksbank delivers the first steps to policy normalization we expect, SEK should be put on a much more solid fundamental footing. This is probably more a theme for early 2018, however, as year-end dislocations across markets may keep SEK vulnerable— and volatile—for now. With 2017 looking likely to end on a choppy note, we think EURSEK could be a compelling sell in January.”

“Rates Strategy: We think impact of end of QE is likely to be limited with Riksbank still remaining continuing with its re-investment policy.”