NEWS / Foreign Exchange

Sweden: Dissent within the Riksbank

• In the minutes just released, Deputy Governor ?–berg expressed his dissent in leaving the repo rate unchanged at 3.25% and instead suggested an increase to 3.50%.
• Another member of the board thought that, althought it was not necessary to hike interest rates at this meeting there were arguments speaking in favour of a higher interest rate path than envisaged in the Monetary policy report from February.
• Dissent within the executive boardt also means that the successor issue (two replacements to Deputy Governors Persson and Srejber) becomes considerably more interesting.
• On balance, the minutes were more hawkish than what we and the markets were expecting. Interest rates have thus risen and SEK strengthened. However, note that the majority of the board saw no reason to change the interest rate forecast from February.
• However, since we have previously added a hike in October (policy rate peak at 4%), we believe that the increased inflation risks commented on in the Riksbank minutes have already been accounted for in our current interest rate forecast.