Swedish Riksbank Rate 3.75% vs. Exp. 3.75% (Prev. 3.5%); forecast expects at least one more hike this year and increases pace of bond sales
Important
SourceNewsquawk
SectionOther Central Banks
Rate decision here
FX hedging release here
Economic Commentary
- Inflation is falling but is still far too high.
- New information, such as service prices rising unexpectedly rapidly and a weaker krona, indicates that inflation is declining more slowly than expected.
SEK
- The weak SEK is contributing to keeping inflation up, and there is a risk that the pass-through of the krona to price increases is larger in the current situation of high inflation.
- Considering hedging part of the foreign exchange reserves.
- The starting point for this is that the amount hedged will correspond to about one-quarter of the FX reserves.
- The FX reserves currently amount to around SEK 410 billion.
- The measure is aimed at reducing the Riksbank’s financial risks.
Balance sheet
- The Executive Board has also decided to increase the pace of government bond sales from SEK 3.5 billion to 5 billion per month with effect from September this year.
Rate Path
- The forecast is for the policy rate to be increased at least one more time this year.
