SEK: Inflation not easing and Riksbank shying away from signalling further hikes would be fatal – Commerzbank

The market has shown that it is concerned the Riksbank might drop behind the curve by trading the Krona at low levels recently. Economists at Commerzbank analyze SEK’s outlook.

The Riksbank cannot be surprised

The Riksbank will have to signal its willingness to implement further rate hikes due to continued high inflation rates, regardless of the fact that it is likely to hike the key rate again.

If inflation does not ease significantly and if the Riksbank also shies away from signalling further hikes next week that would be fatal for the Krona, and the board members should not be surprised if it eases further.