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Riksbank to take a chance on “QT” next year

Housing market valuations in Sweden are even more stretched than on past occasions when the Riksbank has “leant against the wind” – that is, set policy tighter than needed to contain consumer price inflation. While we think the Bank is unlikely to raise the repo rate for at least two years, we expect it to shrink its balance sheet by the end of next year – sooner than it has suggested up to now, and before its peers.

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