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Minutes Summary: Taper of reinvestments in 2022 looking likely

RIKSBANK
  • The main highlight of the Riksbank Minutes was that half of the Executive Board now expect to see a further fall in asset purchases later in 2022 (i.e. not fully reinvesting).
  • Ohlsson said that he "would not have objected to" a lower purchase target for corporate/covered bond purchases.
  • Breman said: "My assessment is that it may be appropriate to taper reinvestments further in 2022, but that it is reasonable to take decisions one quarter at a time."
  • Floden said that if his view that financial conditions would not be affected by the fall in gross purchases between Q4-21 and Q1-22 was correct that "I will probably advocate some further tapering in the coming quarters."
  • This will likely leave Ingves as the swing member on the Riksbank again. He gave little away about his views of future policy (compared to that outlined by the MPR).
  • The other two Executive Board members were notably more dovish with Skingsley saying that "asset holdings need to remain unchanged in 2022" while Jansson had "doubts about the proposed upward revision of the repo-rate forecast in 2024."
  • These Minutes saw little reaction in currency markets and were largely in line with our expectations. As we noted in the MNI Riksbank Review, we think the next meeting could see a further step away from uber-dovishness and that covered bonds look vulnerable to another cut in Riksbank purchases. See full MNI Riksbank Review here.
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