The Swedish central bank, Riksbank, is unlikely to make any changes to its monetary policy during its meeting next week. According to a DNB Market research report, the policy rates and asset purchases are unlikely to see any change. The central bank is likely to keep the policy rate unchanged at -0.5 percent and is expected to continue asset purchases until this summer as was announced in December.
Since the Riksbank’s meeting in December, both inflation and resource utilization have been slightly higher than expected by the central bank. Thus a slightly higher rate path is expected. The rate path is mostly expected to have a small downward bias to avert the Swedish krona from strengthening too rapidly and the central bank is unlikely to begin hiking rates until next year.
The Swedish krona has appreciated more than projected since December; however, it is still at its weak levels. Currently, this is less urgent for the central bank as inflation is close to target; however, a quicker strengthening of the currency might result in additional easing from the central bank in the future.
“In any case, we expect Riksbanken to expand the mandate for currency intervention that expires on 14 February”, added DNB Markets.
