EUR/SEK: Krona likely to remain under pressure – Commerzbank

The Riksbank hiked policy rates by 25 bps. Economists at Commerzbank analyze SEK outlook after the Interest Rate Decision.

Riksbank disappoints

The Riksbank hiked its key rate by 25 bps to 4% as expected and at least referred to the possibility of the key rate rising further. The projections for the key rate were also raised, but the changes are only marginal and suggest a higher likelihood of the Riksbank having reached the end of its rate hike cycle.

From the market’s point of view, it is clearly not sufficient to say that the key rate could be raised further, as the current statement says. That means the Krona is likely to remain under pressure. 

If inflation remains stubborn the FX market might punish the Krona due to Riksbank’s dovish approach.