18 Feb 2016
Swedish price data may highlight Riksbank dilemma - BNPP
Economists at BNP Paribas, expect a sizeable uptick in Sweden’s headline inflation to 0.4% y/y in January from 0.1% in December.
Key Quotes
“This week’s comments from Riksbank Governor Ingves suggested that with the economy near capacity the central bank see inflation back at target around the end of the year. Tensions within the Riksbank are rising as evidenced by the two hawkish dissents from the February rate cut, and we think that policymakers will find it increasingly hard to sustain SEK weakness.
With ECB likely to deliver aggressive policy easing in March we see renewed prospects for EURSEK downside which was one of our top G10 FX views going into 2016. Consequently on Wednesday we recommended a short EURSEK spot recommendation with a 9.15 target , above the levels where we think EURSEK will be vulnerable to Riksbank FX intervention.”
Key Quotes
“This week’s comments from Riksbank Governor Ingves suggested that with the economy near capacity the central bank see inflation back at target around the end of the year. Tensions within the Riksbank are rising as evidenced by the two hawkish dissents from the February rate cut, and we think that policymakers will find it increasingly hard to sustain SEK weakness.
With ECB likely to deliver aggressive policy easing in March we see renewed prospects for EURSEK downside which was one of our top G10 FX views going into 2016. Consequently on Wednesday we recommended a short EURSEK spot recommendation with a 9.15 target , above the levels where we think EURSEK will be vulnerable to Riksbank FX intervention.”