Swedish Krona: Riksbank hawkish hold backs currency – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad reports the Swedish Krona (SEK) rallied after the Riksbank delivered a hawkish hold, keeping rates unchanged but signaling more tightening ahead. The new rate path implies nearly 75 basis points of hikes over twelve months, aligning more closely with market pricing. Haddad sees this firmer policy stance as supportive for SEK against major peers.

Riksbank signals more tightening ahead

"SEK rallied against most major currencies. The Riksbank delivered a hawkish hold. As was widely expected, the Riksbank kept the policy rate at 1.75% for an eighth consecutive meeting and firmed up its hawkish bias."

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"The statement noted that “the policy rate should be raised more going forward than projected in the June forecast” while signaling again it expects “the increases to the policy rate will begin this year.”"

"The Riksbank’s new policy rate forecast implies nearly 75bps of tightening in the next twelve months to 2.50%, up from 25bps in June. That brings its rate outlook closer to the 125bps priced by markets and is supportive of SEK."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)