The Riksbank and Norges Bank both held their monetary policy meetings this week.
The most eventful one was the Riksbank’s. Although leaving its monetary policy unchanged, the Swedish central bank tweaked its forward guidance on rates to signal that it expects to bring the key policy rate back to zero in December (from the current level of -25bps). The board took the decision unanimously. Given the recent worsening in both soft data (September manufacturing PMI came out at 46.3, last seen in 2013) and hard (GDP growth slowed to 1.0% yoy in 2Q, a six-year low), markets entered the meeting pricing in only a 20% probability of a hike in December and a 40% probability of a hike by February.
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