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RESEND: POV: RIKSBANK RISKS FOR SEK........>

RIKSBANK
RIKSBANK: RESEND: POV: RIKSBANK RISKS FOR SEK (decision at 0830GMT)
- 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.

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