RIKSBANK'S FIRST INTEREST RATE CUT COULD COME AS EARLY AS MAY, KRONA’S UPSIDE POTENTIAL LIMITED – COMMERZBANK

Antje Praefcke, FX Analyst at Commerzbank, fears the worst: that the Riksbank's first interest rate cut could come as early as May.

The Riksbank will not be cautious

When I look at the statements made by Riksbank Executive Council members in recent weeks, I fear that the Council is inclined to cut the key rate as soon as possible, i.e. as early as May.

And this is against the backdrop that the disinflation process has stalled in many countries, which is making many central banks cautious about initial interest rate cuts. 

I guess that the Riksbank will not be cautious. Even the majority of the market already sees an interest rate cut of 25 bps in May but is still far from being fully convinced. If I am ultimately right in my assumption, I would no longer attribute any upside potential to the Krona.