MNI ANALYSIS: Riksbank Voting Suggests Unanimity Over 1st Hike

--Voting History Of Insiders/Outsiders Points To All Six Backing Hike

By David Robinson and Jai Lakhani

     LONDON (MNI) - Riksbank Executive Board members are likely to vote

unanimously for the next rate hike, due in December or February, MNI analysis of

their past behaviour shows.

     Two members of the six-strong board, both outsiders who have come from

academia or the private sector, have already come out in favour of a hike and

the third outsider is sympathetic to one. Past voting patterns show one insider

has never dissented in any policy vote and the other two only once, suggesting

they are likely to vote as a block.

     At the October meeting a majority on the Executive Board agreed that it

would be "appropriate to soon start raising the repo rate at a slow pace, either

in December or February", but provided no steer as to which of the two months it

would choose.

     When MNI analysed Riksbank voting patterns earlier in November, by looking

at dissents on the repo rate, it revealed how Governor Stefan Ingves almost

always ends up on the winning side and that "insiders", who have made their

careers in central banking and/or regulation, are more cautious about policy

change than "outsiders".

     --BROADENED ANALYSIS

     This time MNI has broadened its analysis to look at dissents on the

collective rate path and on asset purchases.

     Pooling every vote together across the repo rate, repo rate path and asset

purchases shows that for current Executive Board members insiders have dissented

four times compared to the outsiders who have done so 32 times.

     Of these dissenters, only outsider Martin Floden has ever come out on the

dovish side. His eight dovish dissents all came before April 2014, tallying with

the narrative of a hawkish shift amongst the outsiders.

     The outsiders on the Riksbank board are Deputy Governors Floden and Henry

Ohlsson, both economics professors, and Cecilia Skingsley, a journalist turned

private bank economist. The insiders are Ingves, First Deputy Governor Kerstin

af Jochnick and Per Jansson.

     Floden, Ohlsson and Skingsley all have track records as dissenters - that

is voting against the final decision.

     --DISSENTERS

     Skingsley dissented on the hawkish side three out of nine times in key

decisions on asset purchases between the launch of quantitative easing in

February 2015 and the end of bond purchases and the vote on reinvestment in

December 2017. In April 2016, for example, she entered a reservation against the

decision to purchase an extra SEK 45 billion of bonds.

     Floden, likewise, dissented a third of the time over the same decisions on

bond purchases. Jansson, af Jochnick and Ingves never dissented over asset

purchases.

     Skingsley has voted consistently with the majority on the repo rate, but

the other two outsiders, Floden and Ohlsson, have shown a tendency to dissent.

     If Skingsley does opt for December rather February, and she has said that

there is no macro-economic difference between hiking at one of those meetings

rather than the other, Ingves would still be in driving seat as he has a casting

vote.

     If af Jochnick and Jansson stay true to form then they will stick together,

and the likelihood is that there will be six to zero vote in favour of a 25

basis point rate hike in either the last month of this year or the second of

2019.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

--MNI London Bureau; +44 203 865 3828; email: jai.lakhani@marketnews.com

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