Ingves overrules logic and the hawkish mutineers

The main takeaways from this week’s Riksbank announcement were that a) Governor Ingves is stubbornly dovish, and; b) three of the six members of the Executive Board advocate “QT” this year. Given that the Governor has the deciding vote on policy decisions, there is a risk that the situation on the Board remains deadlocked until his scheduled departure at the end of this year. However,  we are sticking to our forecast of 75bp of rate hikes by mid-2023 and that it is more likely than not that the Bank’s hand will be forced this year.