Sweden’s central bank, the Riksbank, will deliver its latest monetary policy decision on Wednesday.
Recent times have seen a distinct lack of excitement provided by such occasions as monetary authorities across the globe generally strive to ensure markets are prepared for whatever action is deemed necessary.
But, as the Reserve Bank of India showed on Tuesday when it cut rates by 50 basis points, double analysts’ consensus, there is still the opportunity for the odd surprise.
“We expect the Riksbank to keep the repo rate unchanged [at 1.5 per cent] until Q2 next year, with near-term risks skewed to the downside (driven by euro area debt concerns),” said Goldman Sachs in a note.
But the bank added: “Markets, however, are pricing about a 40 per cent probability of a cut.”
This could mean that there are many traders positioned for a further easing who may have to scramble to cover their bets if the Riksbank stands pat.
And that could, on balance, give a boost to the Swedish krona, a move that may be amplified if it later breaks through resistance at about SKr8.8 versus the euro.
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