Riksbank’s strategy remains a mystery to the market

The Swedish Riksbank's strategy is and remains a mystery. The market reaction to the uneventful Riksbank's Executive Board meeting proved that. Even though the Board had not convened for a monetary policy meeting but for a regular interim meeting, it had used an interim meeting to announce an extension of the expansionary measures (cutting the key rate and expansion of the bond purchases) in March after the strong appreciation of the krona threatened the inflation outlook. 

Following the surprisingly weak April inflation data published last week it now seemed obvious that Riksbank would use such a meeting to extend its measures once more. After all, inflation was well below its expectations and the next regular monetary policy meeting is not taking place until early July. 

However, Riksbank did not announce any measures yesterday causing EUR-SEK to drop like a stone. The market might now once again feel tempted to test Riksbank and trade EUR-SEK further down.

However, the Swedish central bank is not expected to remain inactive in that case. 
According to Commerzbank, Riksbank is likely to take action in the area below 9.20 in EUR-SEK at the latest.