In the view of Antje Praefcke, FX Analyst at Commerzbank, the Riksbank must continue its fight against inflation with determination. If not, Krona could come under significant pressure.
Riksbank will have to deliver more
“Even though inflation expectations haven’t risen, confidence in the Riksbank’s determination to get inflation under control has to remain intact. That is why it is unavoidable in my view that the Riksbank continues to hike its key rate and for it to possibly implement a 50 bps rate step in April.”
“If doubts about the Riksbank’s determination arise on the market that would constitute a negative sign for the Krona – even though the Riksbank underlines that a weak krona can also lead to further rate hikes. Concerns about an insufficiently decisive Riksbank would put the SEK under considerable downward pressure.”