Key take-aways
The Riksbank made a significant reduction to the inflation forecast in particular (down 0.4 percentage points at most) and small adjustments to the macro forecast in general (see table). The chart below, however, illustrates that there is still a margin to our own CPIF forecast.
The central bank repeated the mantra that monetary policy is having an impact and that inflation is rising. This is not controversial, we believe it too. The question, however, is if it is rising fast enough. Danske Bank's forecast is still a couple of 10ths below Riksbank's forecast for the autumn. It apparently continues to see downside risks to inflation and inflation expectations stemming from the lower oil price and the turmoil in the financial markets.
As before, Riksbank says it stands ready to act again with repo rate cuts, more government bond purchases and possibly moving into other bonds or even FX interventions. This is nothing new. We retain our view that Riksbank will need to act again in December with a 10bp repo rate cut. We expect EUR/SEK to continue to trade in the 9.30-9.60 range
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