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Nomura's Global Markets Research Team has analyzed that the Riksbank is likely to maintain its current monetary policy stance for an extended period. Swedish inflation has consistently undershot market expectations for four consecutive months, driven by weak domestic demand and a weaker krona. However, rising energy prices due to geopolitical tensions in the Iran conflict could offset this downward pressure and reintroduce inflationary risks. The report suggests that while the Riksbank has room to delay rate hikes, renewed energy price volatility may force a policy reassessment. For forex traders, the SEK remains under pressure from divergent central bank policies and energy-linked inflation risks. The krona's performance will hinge on the balance between domestic disinflation and global energy price dynamics. Investors should monitor the Riksbank's communication for clues on policy flexibility amid shifting inflation trajectories. The broader eurozone's monetary policy stance and USD strength will also influence SEK cross rates. Looking ahead, the key focus will be on the evolution of energy prices and their impact on Sweden's inflation outlook. If the Iran conflict escalates, energy markets could see renewed volatility, potentially altering the Riksbank's timeline for policy normalization. Traders should also track the European Central Bank's rate decisions and the US Federal Reserve's inflation data for indirect effects on the SEK. The interplay between these factors will shape the krona's medium-term trajectory.
