SEK: Some shifts in Riksbank board – Nomura

Analysts at Nomura explain that SEK rallied on the release of the 7 September meeting minutes on the headline that some members of the board saw overheating risks in the economy.

Key Quotes

“Our take is that recent minutes do not show a big shift in stance. 

• The board was unanimous in its agreement that it was too early to consider making policy less accommodative. Most members favoured waiting for further evidence that inflation is stabilising around target, in particular to see the impact of the SEK strength this summer on inflation. 
• Most members continue to believe that the risks from running the economy hot are smaller than the risks associated with allowing inflation to fall below target. 
• Governor Ingves, who has had the casting vote in many recent policy decisions, continues to highlight significant dependence on monetary policy abroad – in particular the ECB.” 

“We do think there are two developments in latest minutes that are worth monitoring. First, we think Kerstin af Jochnick is now less dovish, showing elevated concerns over housing imbalances. Second, while Cecelia Skingsley has been one of the key opponents of more expansionary policy over the past year, she expressed concerns about the impact of a premature break from QE.”