Riksbank Review: Sep 2020 - QE Discussion on Hold until Nov

QE Split Discussion on Hold until Nov

• The Riksbank meeting yesterday contained very little in the way of surprises. There were no dissents, the repo rate path was left unchanged, economic growth forecasts were revised higher. Negative rates were again not ruled out. Perhaps the most interesting part of the MPR concerned the currency with the Riksbank seemingly less concerned about its current level noting that risk sentiment had been one of the drivers of its appreciation – something that the Riksbank would have very little control over anyway.
• There were no changes to analyst views that we have seen on the back of yesterday's meeting (see summaries of the views overleaf). We now look ahead to the November meeting to see if there is any larger change in tone and in the meantime will monitor Covid-19 cases across both Sweden and the wider European region.
• Also on the agenda for November will further discussions over the implementation of its QE programme. Purchases of corporate bonds only began this month so it is far too early to monitor the impact of the programme. However, purchases of non-government securities are continuing to prove controversial in Sweden given the relatively small markets by global standards and some of the decisions over which assets are eligible (due to ratings from multiple agencies etc). At present we see it only as a small risk, but there is a chance that the Riksbank may eventually not complete its corporate bond purchases and buy more government bonds in their place.

Please see the document below which includes summaries of 12 sell side analysts: https://emedia.marketnews.com/MNI_Riksbank_Review_-_Sep_2020.pdf