riksbank sweden

Rabbit, Meet Hat: Here’s How To End QE Without Ending QE, According To Sweden

Call it a "sleight of hand"...

Call it a "sleight of hand" - Barclays is. On Sunday, we previewed this week's Riksbank decision, noting that all eyes would be on what the bank decided with regard to the continuation of QE. Monetary policy in Sweden is effectively beholden to Mario Draghi. As Stefan Ingves creatively put it earlier this year, "when you are next to an elephant, you have to be careful." Put differently, if the market perceives that Riksbank policy is taking a decisively different path than ECB policy, that perception will be reflected in EURSEK which of course has implications for the bank's inflation target. So today's decision was important in light of the ECB's October announcement that although APP will be tapered further in January, purchases will extend through September and in all likelihood to the end of next year. The Riksbank got creative. In short, they're going to end QE officially, but they're going to bring forward reinvestments effectively meaning that they will not only retain their presence in the market, their balance sheet will actually expand temporarily. "Likely fearing that the announcement of an end to QE would result in material SEK strength and wanting to retain presen
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