In the view of economists at Commerzbank, it really is high time for Riksbank to overcome its deflation trauma and change its approach. They see little upside scope in SEK even if the central bank sends out clear restrictive signals in April.

It is high time now

“The small, open economy is unable to decouple from the price drivers, that are causing inflation to rise in other parts of the world above all energy prices and supply chain constraints.”

“Towards year-end the market expects a key rate of 1.25%, with four more regular meetings taking place this year, including April (April, June, September, November). That means the Riksbank would even have to hike by more than 25bp once.”

“A tight approach on the part of the Riksbank seems unlikely to me at this stage. That is why I see little upside scope in SEK even if the Riksbank really were to send out clear restrictive signals in April.”