Riksbank to stay on hold in July

The Riksbank is determined to boost inflation ahead of the upcoming pay talks. Inflation has indeed risen over the past year and was higher than the Riksbank's view in May. The Riksbank is expected to stay on hold in July. 

The reason to the higher inflation is the weakening of the SEK during 2014. However, the trade weighted SEK has appreciated lately and is currently stronger than the Riksbank's view. 

In order to prevent the SEK from strengthening further, and in order to safeguard the upturn in inflation,the Riksbank is expected to take further measures later this year.

"No reversal of monetary policy in sight, rather the opposite given an activist Riksbank. Higher rates 5y+ in the pipeline for H2 on back of improved business cycle and this should keep curve steep. Anchored front-end puts roll-down trades back on the map", says Nordea Bank.