Riksbank minutes: Another hike remains on the cards

The Riksbank is likely to hold rates in December before raising the policy rate to 2.25% in February as inflation risks and economic growth remain supportive.

• The Riksbank raised its policy rate by 25 basis points to 2.00% on 3 November, with a unanimous Executive Board and a rate path pointing to a December hold followed by further tightening.
• Governor Thedéen described the September rate path as reasonable and cited global price pressures and supply costs, while treating several hikes next year as a risk rather than the baseline.
• Bunge supported gradual tightening because households face pressure from fiscal policy, energy prices and inflation, while also highlighting wider credit spreads, high debt and debt-financed investment.
• Seim viewed the recovery as robust and inflation excluding constant taxes as above target, while Jansson and Hjelm pointed to demand, supply constraints, energy prices and a weaker krona as upside risks.
• October inflation came in well below expectations and the krona had strengthened relative to the September forecast, supporting a December pause, while intact growth and likely December hikes by the ECB and Fed keep February tightening plausible.
• Nordea expects the policy rate to reach 2.25% in February and mark the peak of the cycle; a peace agreement in the Middle East could alter the outlook, although the authors still see reasons for another hike.

Takeaway: Investors should expect a December pause followed by a February hike, with the forecast exposed to weaker activity, lower inflation and developments in the Middle East.