Nordea Bank expects Riksbank to raise interest rates by 50 basis points

On February 8, Nordea Bank said they expected the Riksbank to raise the policy rate by 50 basis points to 3%, and signaled at least 25 basis points of further rate hikes in the future.

A weaker Swedish krona is a headache for the Riksbank and increases the upside risk to Swedish krona rates. They argue that an upward policy rate path, without rate cuts, may be needed in the second half of the year to prevent further SEK weakness.

Judging from the market’s current expectations, pricing in the next two meetings is reasonable, but the expectation of a rate cut is too early.