Riksbank leans towards not renewing QE in December, minutes show

At least half of the Swedish central bank's rate-setters now believed there was no need to extend asset purchases past December, the minutes of its last policy meeting revealed.

Three of its top policymakers, Martin Floden, Cecilia Skingsley and Henry Ohlsson appeared to imply that there either wasn;t a need for further bond buying or that tighter policy might be justified, Capital Economics's European economist Stephen Brown said in a research note sent to clients.

Nonetheless, there was limited scope for the Riksbank to pursue a "substantially" different policy from that of the European Cenral Bank, Brown said, given the potential for the country's currency - the krone - to appreciate strongly were that to happen.

Two others, Kerstin af Jochnik and the Governor himself, Stefan Ingves, were less clear in their views on the subject, according to Brown, while Per Jansson seemed to see little room for the Riksbank and ECB to diverge.

On the flip-side, CPIF inflation - which strips out the direct effects of interest rates - in Sweden was already set to approach the Riksbank's target of 2.0% early in 2017.

Together with the fact that most sectors in the economy were reporting labour shortages above their long-run averages, suggested wage growth could accelerate quite sharply, Brown said.

"As a result, we agree with the Riksbank’s position that rates will need to be increased in the second half of 2017, rather than the consensus view that the Bank will remain on hold until 2018."

As of 1147 BST the US dollar was off by just 0.08% against the Swedish krone at 8.5922.