Sweden's Riksbank might cut in December?

The Riksbank made a significant reduction to the inflation forecast in particular (down 0.4 percentage points at most) and small adjustments to the macro forecast in general. However, there is still a margin to our own CPIF forecast.

The central bank repeated that monetary policy is having an impact and that inflation is rising. This is not controversial. The question, however, is if it is rising fast enough. 

Apparently, downside risks to inflation are continued to be seen and inflation expectations stemming from the lower oil price and the turmoil in the financial markets. As before, Riksbank says it stands ready to act again with repo rate cuts, more government bond purchases and possibly moving into other bonds or even FX interventions. 

"This is nothing new. Riksbank might need to act again in December with a 10bp repo rate cut. EUR/SEK is expected to continue to trade in the 9.30-9.60 range", says Danske Bank.