On Wednesday, January 11, Indonesia announced that it would state a change in its policy on ore exports later in the week. This led to a 4% drop in the nickel price at the end of trading on that day. Then, on Thursday, January 12, Indonesia announced that it is lifting its ban on ore exports. In Thursday's trading, the nickel price pared its losses at 5% but then rebounded later and closed unchanged from the January 11 price. The opening of Indonesian ore exports is set to have longer-term effects on nickel prices and the stainless steel industry.
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Executive Board split regarding new measures
At first sight, there was nothing particularly remarkable about the Riksbank's final monetary policy decision for 2016. The repo rate is unchanged and the Riksbank will continue its bond purchases for another six months. However, if we consider that the Executive Board was totally split regarding the decision to make more bond purchases (two completely against and one in favour of half the amount), and that the possibility of more measures between the meetings is being removed, the tone is definitely more hawkish than expected.
We retain our view that the Riksbank has completed its monetary policy interventions. We believe the repo rate will be raised on the first occasion in H1 2018 and no further bond purchases will be decided. Concerning the repo rate, however, the risk scenario is tilted toward an increase toward the end of 2017.