Riksbank likely to leave interest rate path unchanged this week, SEK to appreciate: Commerzbank

The Swedish Riksbank is expected to leave the interest rate path unchanged for the time being. After a difficult start into the year, this means that the krona has the chance to appreciate, according to the latest research report from Commerzbank.

Of course the Riksbank, like many other central banks, now sees increased risks, primarily of an external nature. As an open economy, these risks could have a significant impact on Sweden's economy.

Therefore, the central bank will sound a little more cautious at its interest rate meeting on Wednesday and may lower its growth forecasts. However, this will not be enough to cancel the planned interest rate hike in the second half of the year, the report added.

As long as its assessment of the economy, inflation, inflation expectations and financial stability does not change significantly, which is obviously not the case so far, the Riksbank will stick to its stance for the time being and merely comment on and observe the development of risks.

"It is likely to stick to its plan to raise the key interest rate again in the second half of the year, as there is still no reason to call off this hike despite increased caution," Commerzbank further noted.