Riksbank seen on hold in July – Danske Bank

Senior Analyst at Danske Bank Stefan Mellin believes the Riksbank will keep its monetary status quo unchanged at next month’s meeting.

Key Quotes

“In July, we expect the Riksbank to leave its repo rate path intact which means a first hike in Q4 (10bp in October is what the rate path implies), while inflation is sufficiently close to its forecast. This should lend nearterm support to the SEK (reflected in our 1M forecast)”.

“The Riksbank is still too optimistic on medium-term inflation though as well as on GDP growth. Meanwhile, the ‘European elephant’ is in our view on hold until late next year. Therefore, we expect the Riksbank will eventually adopt a softer stance and postpone the first hike until next year. This should put upward pressure on EUR/SEK (cf. 6M forecast)”.