Amid tumbling commodity prices, the Riksbank inflation outlook is becoming more and more challenging. The rapid increase in the RB inflation path during autumn is largely reflecting assumed base effects from energy prices. But after the renewed decline, Brent-oil is now 30% below the futures-based Riksbank forecast. On top of this, as the risk-off sentiment gets a grip of the market, the outlook for the global economy looks murkier. Thus, the pressure will still be on the Riksbank.
With the Riksbank holding a larger share of the issued amount of government bonds, the bond market is getting affected. It will get even more distorted, as the Riksbank still has SEK56.5bn left to buy and when that is done in December, the central bank will hold 22.5% of issued nominal government bonds. Moreover, as the pressure on the Riksbank mounts, the announcement of further purchases cannot be ruled out.
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