POV: RIKSBANK RISKS FOR SEK - We are.......>

RIKSBANK: POV: RIKSBANK RISKS FOR SEK

- We are sympathetic to the view that the weak GDP and CPIF data will be enough

to see the Riksbank stay on hold and revise down their rate projections a little

which would see SEK depreciate.

- To say that there are mixed expectations for the Riksbank rate announcement on

Thurs would be an understatement. The Bloomberg survey shows 14 analysts expect

the Riksbank to leave rates on hold, while 10 expect a 25bp hike. Market pricing

was around 40% for a hike on Monday, slightly below the guidance for Dec of 50%

given by the Riksbank in Oct. However this only tells part of the story.

- Some forecasters are looking for a hike with little in the way of a change to

the rate projections (SEK would rally). Others are looking for a dovish hike

with a potentially significant lowering of the rate projections (SEK depreciates

if revisions are sizeable). Some are looking for the Riksbank to wait until Feb

to raise rates, but to keep the rate path unchanged (negative for SEK on the

margin). Others are stating that if the Riksbank don't hike now there will be no

new compelling reasons to hike in Feb, so it's now or never.