Free Trial

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".
     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.
     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
     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
     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
--MNI London Bureau; tel: +44 203-586-2223; email:
--MNI London Bureau; +44 203 865 3828; email:
[TOPICS: MT$$$$,MX$$$$]

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.