Flash Comment - Riksbank Adds Linkers To QE

Published 04/21/2016, 08:15 AM
Updated 05/14/2017, 06:45 AM

Contrary to our expectations, the Riksbank extended QE purchases of nominal government bonds from SEK200bn to SEK230bn (from end-June to end-year) and added SEK15bn in linkers, apparently a precautionary step aiming to keep the SEK from appreciating too fast (not to break the upward trend in inflation). The repo rate remained unchanged at -0.5% and the repo rate path remained unchanged. It also repeated that is stands ready to ease policy further if needed.

It is worth noting that the QE expansion means that nominal purchases slow to roughly half the previous pace, i.e. from SEK65bn in H1 to SEK30bn in H2 in nominal bonds.

The Krona index (KIX) forecast again shifted down (about 1% this time) suggesting that the Riksbank despite everything has slightly more tolerance for a SEK appreciation.

The macro forecast was almost unchanged.

To read the entire report Please click on the pdf File Below.

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