**As seen in Risk In The Week report 11/18/2022, cablefxm.co.uk/reports
The last time the Riksbank met it delivered a 100bps hike taking the Repo Rate to 1.75%, this was the Swedish central bank third consecutive move and the largest on record. We remind you that at this same time three years ago, the Riksbank was in the last days of its negative interest rates monetary policy, the cost of money was held at -0.25% until December 2019 where the central bank finally lifted rates to zero. Now, 175 basis points of tightening have been delivered, and the central bank is set to tighten more as it attempts to bring inflation back to target. The Riksbank upwardly revised its inflation forecast from the June projections, the Repo Rate expectation for 3Q 2024 is now at 2.47%, up from the prior 2.01%. We remind you that our inflation tracker leaves Swedish prices on the second- highest relative to central bank target, headline inflation is now at 10.9% Y/y or at an 8.9pp overshoot. Tightening policy further will only get more difficult as the Swedish growth forecast was revised lower. The Riksbank now sees 2023 GDP contracting at 0.7%, down from the June projection of 0.7% growth, the 2024 GDP projection was revised lower to 1.1%. Analysts at SEB say the most likely outcome is for the Riksbank to lift policy by 75bps, however, they put a 40% chance that the move will be by 100bps and the central bank signals policy at 3.25% by end of 2023. SEB notes that core inflation is faster than previously expected and that it is unlikely that prices have seen a peak.
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