Riksbank Preview: No Further Easing – Goldman Sachs
Lasse Holboell Nielsen, Research Analyst at Goldman Sachs, suggests that
they expect the Riksbank to leave its repo rate unchanged next week at
-0.50% and also expect the Riksbank to leave its target purchases n of
government bonds at SEK200bn.
Key Quotes
•
“The uncertainty surrounding the repo rate decision appears smaller
than at recent meetings. On this occasion, we see the risk of a cut as
low. We view the risk of an announcement of further bond purchases as
slightly higher (as the programme is scheduled to expire in mid-2016),
but overall low.
• Growth remains robust in Sweden (even if momentum has slowed slightly) and capacity utilisation appears close to normal.
•
Inflation appears to be trending upwards towards target, with core
inflation now close to 2%yoy, higher than projected by the Riksbank in
February.
• Inflation expectations continue to edge higher, albeit slowly.
•
Other central banks have eased since February, notably the ECB in
March. But this was broadly as expected by the Riksbank (prompting a
repo rate cut in February), implying that the delivery of the easing by
the ECB in March should not prompt further action for the Riksbank.
•
Communication appears slightly hawkish, with Executive Board member
Skingsley showing greater willingness to look through short-term
volatility and focus on strengthening inflation.
• With no major changes to the outlook, we expect no material revisions to the Riksbank’s repo rate path.
• We expect next week’s meeting to be broadly neutral relative to market expectations.”
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