The bar is high for Riksbank to deliver on hawkish expectations, hence EUR/SEK is trending upward - Credit Suisse

Although the risks for EUR/SEK remain on the upside, the threshold for the Riksbank (the central bank of Sweden) to meet the market's hawkish expectations

April 27, 2022 - 02:18 PM 297 views

The bar is high for Riksbank to deliver on hawkish expectations, hence EUR/SEK is trending upward - Credit Suisse

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© The bar is high for Riksbank to deliver on hawkish expectations, hence EUR/SEK is trending upward - Credit Suisse

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Although the risks for EUR/SEK remain on the upside, the threshold for the Riksbank (the central bank of Sweden) to meet the market's hawkish expectations is likely to be high. Therefore, the Riksbank economists at Thursday’s Riksbank meeting are holding their EUR/SEK target (10.60) up.

They think, "For the EUR/SEK currency pair to fall, they believe the Riksbank will have to offer an extremely hawkish policy mix at tomorrow's meeting. Therefore, the bank must either a) increase the rates or b) announce a front-loaded tightening cycle that includes a June hike and one or two 50-basis-points hikes. In the light of such a varied local economic low, they believe the Riksbank will be unlikely to jump through these hoops.

The economists at Riksbank strongly believe that even if the inflation rate drops, Sweden remains the only country to question the local backdrop and guarantee to tighten the monetary policy to 250 bps. They always aim to hold the EUR/SEK target at 10.60.

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