Things were going quite well for the Riksbank. It seems to have convinced the markets that it will prevent an (excessive) appreciation of the SEK, which is why EUR-SEK has not traded notably below 9.20 since March. However, inflation is still hovering around zero, which means that the Riksbank cannot permit the SEK to appreciate significantly, as a firmer exchange rate would cause a major setback in the fight against deflation.
In this situation the ECB is making life more difficult for the Riksbank by hinting at further expansionary measures, thus continuing the policy which forced the Riksbank to push its key rate down into negative territory and launch its own QE programme in the first place.
"Against this background we expect the Riksbank to use today's opportunity to indicate that it is willing to continue the fight against an SEK appreciation and against deflation. A symbolic expansion of the bond purchases is likely. However, with the market expecting the Riksbank to respond to the ECB, the upside in EUR-SEK is limited", states Commerzbank.
