King & Goodfriend’s review likely to influence Riksbank’s Executive Board meet

The review of Riksbank by King & Goodfriend recommends that the bank should focus more on financial stability rather than solely inflation targeting and also that it should be able to deviate from the 2% inflation target for periods of time, as reported by Reuters.

The review is expected to argue for a more flexible monetary policy. A strong Swedish economy and the elevated credit growth focuses' on a less accommodative monetary policy stance and provides no support for additional stimulus measures from the Riksbank. Adopting these recommendations or not is now up to the Riksbank and partly also to the Riksdag. December meetings minutes suggest that the Riksbank's Executive Board is open for discussing the framework, which is likely to change the framework later this year.

"The message from the review may affect the Executive Board already in the near term. This is a risk to our call for a rate cut at the February meeting" - Nordea Bank