Following last week’s downside surprise to Swedish inflation, pressure on the Riksbank has once again increased, with several market participants expecting some form of additional easing during the Bank’s executive board meeting (Monday). Despite the latest inflation surprise, the average y/y CPIF inflation growth rate has been in line with the Riksbank’s year-to-date forecast, whereas 1- and 2-year ahead inflation expectations, presented in the latest TNS Sifo Prospera report, have increased somewhat. The combinations of those factors and the range-bound activity in EURSEK suggest that although the risk of some form of extra easing cannot be ruled out, it cannot form part of our baseline scenario. Barclays notes:
- We think that significantly more accommodative policy is unlikely, given existing measures and the strong growth outlook.
- We continue to expect the Riksbank to be more comfortable in allowing a stronger SEK once inflation is clearly on an upward trajectory but continue to expect EURSEK to trade in range in the short term.
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