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🏦🇸🇪Cable FX Macro Weekly Note: Riksbank April Repo Rate Decision

**As seen in Risk In The Week report 04/21/23, subscribe at cablefxm.co.uk/reports

Back in February, the Riksbank lifted policy by 50bps to 3.0%, this was in line with market expectations. The move took Swedish cost of capital to the highest level since 2008 as the central bank delivers its fifth consecutive Repo Rate hike. The central bank's statement said it would need further rate hikes over the Spring and announced it will begin selling government bonds from its balance sheet beginning April. On the inflation front, the Riksbank lowered its CPIF projection for 2023 to 5.5% from the prior 5.7%, this was lower than economists’ survey median projection of 5.8%. Expectations do not see the Riksabank giving ground as consumer prices remain resilient, the latest print shows the pace above double-digits at 10.6% Y/y. Analysts at Commerzbank said that they would expect the central bank to give indications of how high the Repo Rate would rise at its April policy meeting. They reminded us that the February forecast projected rates rising to 3.33% by mid-2023, with inflation running 8.6 percentage points above target, we’re likely to get an upward revision to this estimate. The desk as Handelsbanken recently lowered its April rate hike expectation to 50bps from a prior 75bps, they noted that the risks of a price-wage spiral had diminished. Handelsbanken sees a peak Repo Rate at 4%, this is higher than the median projection of 3.75%.


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