Swedish Krona: Riksbank seen holding but keeping hike option – Commerzbank
Commerzbank’s Antje Praefcke expects the Riksbank to leave its policy rate at 1.75% while continuing to signal a possible hike by year-end. Despite very low current inflation, projections show price pressures rising again as temporary tax cuts expire and energy prices stay high.
Antje Praefcke, a Commerzbank analyst, anticipates the Riksbank to maintain its policy rate at 1.75% while signaling a possible rate hike before the end of the year. Despite current low inflation, rising price pressures are expected as temporary tax cuts end and energy prices remain high. The Riksbank is projected to keep its policy rate unchanged at 1.75% today, maintaining a non-commital stance for the Swedish Krona (SEK).
The halving of the value-added tax on food is one of several temporary fiscal measures expected to initially curb inflation before it rises again once the measure expires. Energy prices have been high, causing direct inflation and indirectly driving up imported goods and commodity prices. The krona's depreciation since the start of the year is also likely to affect prices in the coming months.
The Riksbank's decision today is anticipated to be neutral for the SEK, with only minor adjustments possible.
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