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Riksbank expected to ease further – Danske Bank

FXStreet (Edinburgh) - In the view of analysts at Danske Bank, the Swedish central bank could intensify its easing programme in the upcoming months.

Key Quotes

“Since the previous monetary policy expansion in July, we have had a case of the Riksbank becoming trapped between a fundamentally warranted strengthening of the SEK, which will put a damper on the economy and, hence, inflation”.

“From a Riksbank perspective, the situation was all the more troublesome as the extensive centralised wage negotiation round, comprising some four million workers, has been just around the corner (mainly Mar/Apr 2016)”.

“As major central banks have softened, the pressures on the Riksbank to act have increased. We think that by no later than the December meeting (published 15 December) the Riksbank will need to act, cutting rates by another 10bp (to -0.45%) and expanding the QE-programme far into 2016 as well as widening eligible securities to municipalities, possibly ABS and perhaps even foreign government bonds (i.e., FX interventions)”.

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