A weak currency can only take you so far
Despite expectations to the contrary, the Riksbank is far from being in a position to shift tones. Today’s decision and beyond are maintaining policy differentials. In reality data has been on ‘trend disappointment (according to the UBS Surprise Index) since early 2013, underscoring the SEK’s weakness despite very light positioning. In addition, now it is possible that currency stimulus is not enough, and the Riksbank – like the Fed – may need to open a debate about structural factors, especially in labour markets.
Read the full report: UBS