Considerable downward revisions to the rate path by the Riksbank yesterday came as a surprise to us and have made us change the short-term outlook for monetary policy. On the back of that we now foresee a large probability for a rate cut at the next meeting on July 3. After its substantial revisions of the rate path the Riksbank indicates it will refrain from hiking rates at least until Q3 2014 changed from Q4 2013. Moreover the near term rate path was lowered marginally now indicating a 26% probability for a rate cut at the next meeting in July compared to 20% previously. This will naturally affect the SEK.
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