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11 Mar 2015
SEK strengthening raises rate cut warning – TDS
FXStreet (Barcelona) - The TD Securities Team reviews the inflation data release in Sweden, adding that the strengthening SEK poses downside risks to inflation which might lead to the Riksbank cutting rates.
Key Quotes
“We had the inflation data for Feb released this morning, which saw CPIF rise from 0.6% to 0.9% Y/Y (mkt 0.8% and Riksbank 0.7%) as gasoline prices rebounded more strongly than expected and we saw the weaker SEK (through Feb) feed through into stronger food and clothing prices.”
“The currency reaction has been substantial though, with EURSEK falling below 9.10 for the first time since October, and even though this morning’s data didn’t point to any urgency to cut rates again, the strength in the currency is getting to that point since it raises the downside risks to inflation in the near-term.”
“If the Riksbank wants to bring a halt to this currency move, the only way may be to come in and cut rates, and soon.”
Key Quotes
“We had the inflation data for Feb released this morning, which saw CPIF rise from 0.6% to 0.9% Y/Y (mkt 0.8% and Riksbank 0.7%) as gasoline prices rebounded more strongly than expected and we saw the weaker SEK (through Feb) feed through into stronger food and clothing prices.”
“The currency reaction has been substantial though, with EURSEK falling below 9.10 for the first time since October, and even though this morning’s data didn’t point to any urgency to cut rates again, the strength in the currency is getting to that point since it raises the downside risks to inflation in the near-term.”
“If the Riksbank wants to bring a halt to this currency move, the only way may be to come in and cut rates, and soon.”