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--Five Things We Learnt From Riksbank Policy Minutes
By David Robinson
     LONDON (MNI) - The Riksbank published the minutes from its monetary policy
meeting Thursday. The meeting concluded with a July 3 announcement that the six
member Executive Board had left the repo rate unchanged at -0.5% and the repo
rate path was left unchanged, signalling a hike "towards the end of the year."
     The meeting saw dissents from Henry Ohlsson in favour of an immediate hike,
from Martin Floden who wanted the repo rate path to indicate a 25 basis hike in
September or October and both Floden and Ohlsson opposed extending the power
given to the governor and first deputy governor to undertake emergency foreign
exchange intervention. 
     Here are five things we learnt from the minutes:
     -The minutes highlighted the fragmentation of views on the Executive Board
but on balance pushed back against the downward shift in market rate
expectations ahead of the meeting. Market participants at the time tended to
divide between those looking at a December hike and those thinking it would not
come until 2019. The minutes, however, raised the possibility of an earlier
     -The long awaited acceleration in earnings growth in Sweden is looking more
likely in the Riksbank's view. First Deputy Governor Kerstin af Jochnick said
there was plenty of evidence of "some upward pressure on wages in Sweden,
further facilitated by signs of rising wage growth abroad." This increase in
domestically generated inflation should support the case for monetary tightening
down the line.
     -Deputy Governor Per Jansson, however, edged towards a more dovish view
than the majority. He took the view that the first hike was as likely to come in
2019 as this year and he indicated that he could publish a dissenting forecast
in future.
     -The board was united in identifying the krona exchange rate as a wildcard,
with unexpected weakness and economic uncertainty abroad highlighting the
problem of predicting where it will head next. The board's central view was that
the currency would strengthen but Cecilia Skingsley said "it is just as likely
that the krona will not appreciate, due in part to the international risks." She
also cited the uncertainty generated by the looming Swedish elections on the
currency. Skingsley too indicated that it was reasonable to think a hike could
come before December.
     -Governor Stefan Ingves, however, is playing the classic central bank card
of emphasising the need for caution, but he did acknowledge that the Swedish
policy rate could be higher than those in the European Central Bank, with the
domestic economy running hot.
     The minutes suggest that the debate over tightening is likely to be intense
in the Autumn, with Floden and Skingsley openly contemplating joining Ohlsson in
supporting a hike by October.
--MNI London Bureau; tel: +44 203-586-2223; email:
MNI London Bureau | +44 203-865-3812 |