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Door open for further easing by Riksbank? – Danske Bank

FXStreet (Edinburgh) - In the opinion of strategists at Danske Bank, the Riksbank could ease further via rate cuts and bond purchases.

Key Quotes

“We expect the Riksbank to lower the repo rate to -0.3% and expand the QE programme by another SEK30bn within three months on a combination of uncomfortably low inflation, inflation expectations and EUR/SEK”.

“We expect no FX intervention but such could be unloaded if nothing else helps. Simulations in NiGEM suggest that the Riksbank may need to push EUR/SEK permanently above 10.50 in order to reach the 2% target”.

EUR/SEK will, in our view, be capped on the upside by the ECB and on the downside by the Riksbank. We recommend selling into rallies and buying the dips. We continue to target EUR/SEK at 9.20 in one to three months”.

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