EUR/SEK: Krona to struggle for now due to the dampened sentiment – Commerzbank
Riksbank hiked its policy rate by 50 bps on Thursday. The Swedish krona was unable to benefit significantly from the decision. Economists at Commerzbank are bearish on the SEK in the near-term due to the dampened sentiment.
Riksbank does not surprise
“The Swedish Riksbank hiked its key rate from 0.25% to 0.75% as had been widely expected, while at the same time sounding very hawkish – which also did not come as a surprise.”
“It now expects inflation to remain above 7% for the rest of the year. Against this background, it still sees the need for monetary policy action and now expects a key rate close to 2% at the start of next year. That means that at the two remaining meetings this year it will probably once again hike its key rate by 50 bps. Depending on inflation developments a larger step could not be excluded either, according to Riksbank.”
“It is a supporting factor for the Swedish krona that Riksbank wants to take more decisive action against inflation.”
“Due to the dampened sentiment SEK is likely to struggle for now.”