Sweden’s central bank raised interest rates by 100 basis points, warning of further increases. However, the day ended in disappointment for SEK as he failed to capitalize. According to the Commerzbank economists, the market reaction was exaggerated.
The Riksbank surprises, but the krona weakens
„The Riksbank raised the base interest rate by 100 basis points to 1.75 percent, signaling further interest rate hikes in the next six months. The Riksbank significantly raised its inflation forecasts, but it was delayed, because interest rates always rises since June. In addition, due to the winter energy crisis, it seems reasonable to be cautious about the GDP projections for 2023.
„Unlike the Riksbank, the ECB does not expect a decrease in activity, which is likely to be an overly optimistic view and lead to a break in the interest rate cycle of ECB next year. Instead, the Riksbank is considering weakening its economic growth. Therefore, the Swedish krona should strengthen against the euro in the coming months, even if it intends to do so from a weaker level, because the negative market atmosphere is currently putting considerable pressure on the Swedish crown