Riksbank leaves it Repo Rate unchanged at 0.00% as expected, Riksbank expands and extends asset purchases to SEK 700bln from SEK 500bln up to 31 December 2021 (Prev. H1-2021); Bremen and Floden dissented on the asset purchase decision

• Increases pace of asset purchases during Q1 2021 vs Q4 2020


• Breman advocated that the programme should instead be expanded by SEK 100 billion during the second half of 2021; Flodén thought that the Riksbank should pledge that monetary policy will remain expansionary as long as necessary without deciding now on purchase sums for the second half of 2021.


• The programme now also includes treasury bills, and sovereign and municipal green bonds to ensure the broadest possible impact on rate-setting; the Riksbank will only offer to buy corporate bonds issued by companies deemed to comply with international standards and norms for sustainability.


• CPIF inflation is not likely to lastingly attain 2 per cent until 2023; reiteration from September's meeting

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Reaction details (08:34)

• In an immediate reaction to the expansion and extension of asset purchases, EUR/SEK rose from 10.1300 to 10.1776

Analysis details (08:52)

• Expectations going into the meeting were split on whether the Riksbank would alter asset purchases at this point or wait for clarity as to what exactly the ECB's liquidity boost will be (December 10th meeting for the ECB). Today, the Riksbank elected to increase purchases by SEK 200bln to SEK 700bln vs. Prev. SEK 500bln and pushed out the period to end-2021 vs. Prev. H1-2021. However, bolstering liquidity measures in this manner drew dissent from Breman & Floden calling for a SEK 100bln extension and to delay the decision on altering the size until a later date.


• Given this, the minutes will draw greater scrutiny for the views of other rate-setters as will the aftermath of the ECB gathering to see if the Riksbank's 'pre-emptive' strike was justified in that respect.


• Somewhat surprisingly, the RIksbank did not explicitly mention the SEK in their statement; an area that was expected to draw some focus in-light of the marked appreciation since the last gathering.


• Finally, the forecasts essentially saw downgrades across the board for both CPIF and GDP, Nordea judge these to be somewhat excessive downgrades - though, as with all forecasts at this stage, they are subject to substantial uncertainty and could well be revised once the medium-term picture becomes clearer.


• Press conference at 10:00GMT today.

26 Nov 2020 - 08:30- Fixed IncomeData- Source: Newswires