ABERDEEN ASSET MANAGEMENT Thomas Laskey comments on Riksbank's decision
Aberdeen Asset Management Fixed Income Investment Manager Thomas Laskey comments:
"The Riksbank appears to have been swayed to cut by recent FX appreciation, increasing risks from Greece and weaker inflation expectations. Their move wasn't massively out of line with what the market was pricing but the currency still fell nearly 1%. The central bank has come in for criticism for hiking rates too early in the past and this appears to be a concerted effort to avoid making that mistake again.
"It's interesting that they cut 10 basis points. There was a time when central banks pretty much around the world always moved in 25 basis point units. That era could be over and there's a rational explanation: when interest rates are at rock bottom, central bank policy is mainly about communication. So what may be most important is the signal which a cut sends, rather than its size. Will these smaller rate changes be the norm when central banks start raising rates again as well? Their communication certainly emphasises rises will be limited and gradual and one way to communicate this well might be smaller increments."
For further information contact;
Guy Nicholls
Aberdeen Asset Management
Tel: 02074635809
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