Per Jansson, Deputy Governor of the Riksbank ranted that the favorable inflation trend in recent months might allow the Riksbank to cut interest rates quite quickly (and thus quicker than previously assured). Jansson's statement would be justified if the market shared his view. But it does not, as the market reaction to his comments showed: the SEK fell sharply and was the worst performing G10 currency during Thursday's session.

The Riksbank currently presents a sad picture all round: Its far too cautious rate hikes during the inflation shock, its refusal to openly describe its FX operations as FX interventions (we observers are not so stupid, chaps!) and now a looming rush to cut rates again.

I don't blame those who are beginning to suspect that the Riksbank is not in a position to fight inflation decisively. There are arguments for this view, such as the too much debt of too many private households. We at Commerzbank Research are not so pessimistic. But we will find out much later who is right. Until then, a risk premium is justified. A higher one if statements like Jansson's are made more often.