Riksbank less dovish than expected – BBH

The Riksbank kept policy unchanged, as expected but was less dovish than expected in announcing the end of its bond purchases, according to analysts at BBH.  

Key Quotes

“The bank added that it would continue to reinvest the proceeds of its existing bond portfolio from January 2018 to mid-2019, and noted that this means its bond holdings will still expand during this period.  The Riksbank kept its expected rate path unchanged, signaling an intent to begin hiking in mid-2018.”

“The upside CPI surprise in November and strong growth clearly gave the Riksbank confidence to end bond purchases.  So too did the soft krona, which recently traded above 10 vs. the euro.  EUR/SEK sank on the decision, but has barely retraced 25% of its rise in Q4.  Minimal retracement target comes in near 9.8350, followed by the 50% level near 9.7740.”