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Fast Comment SwedenRiksbank monetary policy decision: No news that rocks the boat

  1. Outlook for repo rate more or less unchanged
  2. Non-negligible changes to inflation forecasts
  3. Ohlsson enters a reservation once again
Outlook for the repo rate more or less unchanged
Fully in line with expectations, the executive board (EB) decided to keep the repo rate at -0.50 percent. After this morning's news that legends Metallica have been awarded the Polar Music Prize, the Riksbank followed through with an equally well-balanced decision. After the rich December monetary policy announcement about the end of QE, the EB now played it cool, sticking with its long-held forecast for the repo rate, despite worries about inflation pressures. However, the written communication on the timing for the coming repo rate rise was changed from "the middle of 2018" to "initiated during the second half of this year". An unchanged repo rate path was expected by analysts, even if some expect the Riksbank to be eventually forced to give up on its interest rate forecast. We, however, keep our forecast for a first rate hike in September.
Non-negligible changes to inflation forecasts
Citing lower-than-expected wage increases, the Riksbank revised down its inflation forecast. As a result, the Riksbank's view on core inflation is now closer to our own forecast than it was before. In 2019, inflation will be close to the Riksbank's target of 2 percent.
Ohlsson enters a reservation once again
Deputy Governor Henry Ohlsson entered a reservation against the decision and wanted to raise the repo rate to -0.25 per cent because of strong economic growth in Sweden and abroad.

Disclaimer

Johan Löf

Senior Economist

Sweden

jolo22@handelsbanken.se

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