Brown Brothers Harriman’s (BBH) Elias Haddad highlights that USD/SEK has fallen on broad Dollar weakness while Sweden’s April disinflation surprised to the downside, reducing Riksbank hike expectations. The swaps curve has shifted lower toward the bank’s projected path, with rates seen on hold at 1.75% until late 2026. Haddad stresses that positive real rates remain supportive for the Swedish Krona.

Deep disinflation but supportive real yields

"Sweden disinflation unexpectedly deepened in April, supporting the case for an extended Riksbank hold."

"The swaps curve adjusted lower, converging toward the Riksbank’s policy rate path."

"The March Monetary Policy Report b showed the Riksbank pencils in the policy rate at 1.75% until Q4 2026, followed by a 25bps hike to 2.00% by Q1 2028."

"The Riksbank is widely expected to keep the policy rate at 1.75% for a fifth consecutive meeting tomorrow."

"Positive real rates bode well for SEK."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)