April 27, 2022 - 02:18 PM 297 views
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.