Home›Forex›Central Banks›Riksbank seen staying on hold at 1.75% until year end

Riksbank seen staying on hold at 1.75% until year end

Commerzbank analysts point to temporary Swedish tax and fuel measures, including a VAT cut for food and retail fuel price reductions, for keeping inflation suppressed for now.

Reported · Written up by our desk · Central Banks

Commerzbank analysts Michael Pfister and Norman Liebke said the Swedish central bank, the Riksbank, is likely to keep its policy rate unchanged at 1.75%, with the first hike not expected until the end of the year, according to an FXStreet newsletter.

They linked the delay to government measures that have temporarily suppressed inflation, noting that Sweden reduced VAT on food from 12% to 6% in April, and that businesses largely passed the change through to consumers.

The analysts also cited retail fuel support, saying gasoline and diesel station prices were reduced by 1 and 0.4 kronor per litre starting in May, with an additional gas station price reduction of 3 kronor per litre implemented in July.

While they said there are reasons to expect a year end increase, they questioned how the market is pricing around 120 basis points of hikes over the next 12 months.

Latest closeGasoline (RBOB) $3.379 ▼5.8%

More like this

Sources