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Executive Summary:

  • Raises rates by 50bps to 0.75%, alongside expectations
  • Policy rate path aligns to previous ‘alternate’ scenario
  • Front-loaded assessment of rates puts policy on pause from mid-2023
Full review with summary of sell-side views here:

MNIRiksRevJun22.pdf

The Riksbank’s 50bps hike in June was inline with both sell-side forecasts as well as market pricing, and the bank used their policy rate path projections to portray a bank that will tighten quickly over the coming quarters, before leaving policy on pause across the rest of the forecast horizon.

Adding a hawkish edge, the bank also flagged an accelerated withdrawal of stimulus via the QE reinvestment channel, cutting bond purchases to SEK 18.5bln, instead of the SEK 37bln flagged in April. The bank flagged that tweak to bond markets would reduce the expansiveness of monetary policy and contribute to inflation returning to target.

The bank’s new policy path projections suggest further rate rises are a certainty for this year, with 50bps rate rises at the September and December meetings now all but nailed-on. From there on, the slope of the path projections moderates considerably, with the peak in the tightening cycle in mid-2023 holding across the entirety of the forecast horizon.

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