Riksbank: Even the slightest hesitation will be punished, with the corresponding effects for SEK – Commerzbank

Norges Bank set an example last week. Is it possible that the Riksbank will follow suit and also surprise the market with a 50 bps rate step tomorrow? Antje Praefcke, FX Analyst at Commerzbank, analyzes how the SEK could react to the Monetary Policy Announcement.

The Riksbank has to convince that it will not drop behind the other central banks

I hope that the Riksbank presents itself as a major hawk.

Even if the Riksbank comes across as very restrictive tomorrow that does not mean that the Krona will be able to benefit on a sustainable basis. 

The Riksbank has to convince that it will not drop behind the other central banks. The market will reward courageous restrictive moves despite risks for growth, whereas even the slightest hesitation will be punished, with the corresponding effects for the Krona.