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New Policy Path Closer To June Main Scenario

SWEDEN

The revised policy path has showed a modest shift up compared to the June MPR.

  • In the June report, the Riksbank presented an alternative scenario where the SEK was weaker than expected, and provided forecasts on the expected policy rate and inflation conditional on this.-
  • The current level of the KIK (Riksbank effective exchange rate index) is 131.9. The main scenario in the June report forecasted a KIK of 130.07, while the alternative forecasted 133.12.
  • It is perhaps surprising that the policy path was not revised further upwards given the SEK's movements over summer, but the Riksbank have likely been put at ease somewhat by the August inflation print and the ECB's "dovish" hike last week.

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