Elias Haddad of Brown Brothers Harriman (BBH) highlights that the USD/SEK exchange rate has fallen as a result of the overall weakening of the dollar, while April disinflation in Sweden surprised to the downside, reducing expectations for a Riksbank rate hike. The swaps curve has moved downwards towards the path predicted by the bank, with interest rates remaining unchanged at 1.75% until the end of 2026. Haddad emphasizes that positive real rates continue to support the Swedish krona.
Deep disinflation, but supporting real profitability
“During April, disinflation in Sweden unexpectedly deepened, which supports the extension of the Riksbank blockade.”
“The swap curve has corrected downwards, converging towards the path of the Riksbank interest rates.”
“The March b monetary policy report showed that the Riksbank forecast an interest rate of 1.75% by the fourth quarter of 2026, followed by a 25 basis point increase to 2.00% by the first quarter of 2028.”
“The Riksbank is widely expected to keep its key interest rate at 1.75% tomorrow for a fifth consecutive meeting.”
“Positive real rates bode well for SEK.”
(This article was created with the facilitate of an artificial intelligence tool and has been reviewed by an editor.)
