Riksbank Preview: Forecasts from seven major banks, risks of a 100 bps hike are back on the table

The Riksbank is set to announce its Interest Rate Decision on Tuesday, September 20 and as we get closer to the release time, here are the expectations forecast by the economists and researchers of seven major banks for the upcoming central bank's meeting. 

Riksbank is expected to continue the tightening cycle with a 75 bps hike to 1.50%. Nonetheless, an even bigger increase could be on the cards, with some analysts highlighting the chance of a full point rise.

Credit Suisse

“We see rising risks of the Riksbank hiking 100 bps.”

Danske Bank

“We expect the Riksbank to deliver 75 bps although 100 bps shouldn't be ruled out.”

Commerzbank

“Riksbank will hike its key rate by 75 bps to then 1.50% while at the same time adjusting the rate path to the upside. The market is also pricing in 75 bps so the effect on SEK is likely to be limited, Riksbank will have to raise its rate path significantly to sound restrictive and to provide upside potential to SEK short-term. I don't want to completely rule out a 100 bps move, but I am skeptical. In this case, however, the krona would see a significant push to the upside.”

Swedbank

“We maintain our call of 2 consecutive 75 bps rate hikes in the autumn followed by a 25 bps hike in February. If anything, risks appear now to be more balanced between more (100 bps) and less hikes (50 bps) in the upcoming meeting. At the September meeting, we also expect the Riksbank to decide on further reductions in asset purchases. We expect them to halve the asset purchases in the fourth quarter, to SEK 4.625 billion in total.”

TDS

“We now see the policy rate ending the year at 2.25%, a 25 bps increase from our previous call. The Riksbank has two options to get there: to hike by 75 bps two meetings in a row or to follow a more front-loaded approach of 100 bps followed by a ‘milder’ 50 bps increase. While it is a close call, we think the latter of the two options is marginally more likely to materialize.”

ING

“With only two meetings left this year and facing higher-than-expected inflation and a tight jobs market, we expect the Riksbank to hike rates by at least 75 bps. We expect a repeat move in November.”

BBH

“The Riksbank is expected to hike rates 75 bps to 1.5%. However, we see risks of a hawkish surprise as WIRP suggests a 100 bps hike is nearly full priced in. There are typically no updated macro forecasts or rate path at the September meetings but the June rate path is clearly outdated and so we expect a hawkish shift to be unveiled at the November 24 meeting that would move the Riksbank closer to the market.”