29 Apr 2015
Riksbank left the door open to further action – TDS
FXStreet (Edinburgh) - Jacqui Douglas, Strategist at TD Securities, reviewed the recent decision by the Riksbank to leave the benchmark rates unchanged in its meeting today.
Key Quotes
“The Riksbank left its policy rate on hold today at –0.25%, in line with our forecast but defying consensus expectations for a –10bps rate cut”.
“The Riksbank did extend QE a bit further than we expected though, announcing an additional SEK40-50bn through to September (on top of the SEK30bn already announced) instead of going just meeting to meeting, giving us a little bit more certainty on the monetary policy path going forward”.
“The Riksbank stressed that it is prepared to do more, and in its repo rate profile showed a policy rate of –0.29% out through Q2 2016, indicating a clear easing bias for some time, and rates are set to begin rising only slowly toward the end of 2016 and never make it back to as high as 1% through the entire forecast horizon (out to Q2 2018).”
“Going forward, we think that the key variable to watch with respect to the chances for further rate cuts in Sweden will be the EURSEK rate. The Riksbank seems to be reasonably comfortable with the 9.30s level that we’ve seen over the last few weeks, but if stronger data or disappointment in today’s lack of rate cut pushes EURSEK toward the 9.00-9.10 level that we saw in March, we think that would be the trigger for another rate cut, potentially intermeeting if necessary”.
Key Quotes
“The Riksbank left its policy rate on hold today at –0.25%, in line with our forecast but defying consensus expectations for a –10bps rate cut”.
“The Riksbank did extend QE a bit further than we expected though, announcing an additional SEK40-50bn through to September (on top of the SEK30bn already announced) instead of going just meeting to meeting, giving us a little bit more certainty on the monetary policy path going forward”.
“The Riksbank stressed that it is prepared to do more, and in its repo rate profile showed a policy rate of –0.29% out through Q2 2016, indicating a clear easing bias for some time, and rates are set to begin rising only slowly toward the end of 2016 and never make it back to as high as 1% through the entire forecast horizon (out to Q2 2018).”
“Going forward, we think that the key variable to watch with respect to the chances for further rate cuts in Sweden will be the EURSEK rate. The Riksbank seems to be reasonably comfortable with the 9.30s level that we’ve seen over the last few weeks, but if stronger data or disappointment in today’s lack of rate cut pushes EURSEK toward the 9.00-9.10 level that we saw in March, we think that would be the trigger for another rate cut, potentially intermeeting if necessary”.