The 25bp rate hike announced by the Riksbank today, which brings the key policy rate to 3.75%, had been strongly signalled at the Riksbank’s last meeting. But the accompanying statement and decisions to accelerate bond purchases and “consider” a form of FX intervention show that policymakers are in hawkish mood. We are raising our forecast for the peak policy rate to 4.25% from 3.75% previously.
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