Apr 17, 2013
Forex Flash: Riksbank rate cut unlikely despite clear easing bias – TD Securities
FXstreet.com (Barcelona) - The Riksbank decided to leave the repo rate on hold at 1.00% today, “as unanimously expected, but struck a decidedly dovish tone via its repo rate forecasts, pushing the first rate hike back by nearly a year from what had been estimated previously”, said analyst Marcin Budkiewicz, pointing to the new CPI forecasts as the driving factor, which see inflation taking even longer to return to the Riksbank’s 2% target. “While the Riksbank did still maintain a clear easing bias, we think that an actual rate cut is unlikely unless we see much weaker foreign demand than what is currently anticipated”, continued the TD Securities analysts, noting that the central bank is still worried about financial imbalances. Also, brighter prospects for the Swedish economy, together with low interest rates, have contributed to an increase in housing prices, and this is expected to continue and to contribute to a faster increase in household debt in the coming period than was forecast earlier.