POV: 7-YEAR ITCH MAY NOT GET SCRATCHED:....>

RIKSBANK: POV: 7-YEAR ITCH MAY NOT GET SCRATCHED: The first Swedish Riksbank

hike in 7 years is expected in late 2018 or Q1 2019, but a dovish outcome seems

largely priced in for Thursday's meeting - leaving room for a hawkish surprise.

-SEK weakness since the July meeting has accompanied falling expectations for a

2018 rate hike (8/17 analysts in Bloomberg survey, OIS curve showing rates just

a few bps higher by year-end) alongside weak services CPI, defying Riksbank`s

July forecasts signalling a rate rise by year-end.

-1 voter is seen backing a hike, 2 lean hawkish, and 3 are cautious.

-Dovish Risk: First rate hike projection pushed well into 2019, econ forecasts

are pessimistic, little concern over weak SEK. Board votes 5-1 to hold.

-Central Scenario: First hike seen in early 2019, with decisions data-dependent,

esp on core/services inflation. 5-1 or 4-2 vote to hold.

-Hawkish Risk: Unchanged rate hike path and 4-2 vote to hold. Board downplays

weak services inflation and Sep 9 election impact. Could signal 10/15bps hike in

coming meetings to get tightening cycle started, with October meeting in play.

SEK appreciates sharply vs EUR.