The market now wants to see Riksbank take action rather than just make announcements. After all the Executive Board members have pointed out sufficiently now that inflation takes top priority for them and that they will not tolerate an excessive appreciation of the krona, notes Commerzbank. Following the weak April inflation data the market is now understandably challenging the Riksbank by trading EUR-SEK at lower levels. It is high time for the Swedish central bankers to show the market that they are really serious.
The longer they wait the more courageous the market participants will become and the more quickly EUR-SEK will ease. Meanwhile, the reasoning used by some analysts that Riksbank was waiting to see whether the weak April inflation data was due to temporary factors makes no sense. Even if that really was the case the appreciation of the krona means that temporary low inflation could easily become permanently low inflation.
The material has been provided by InstaForex Company – www.instaforex.com