The USD/SEK currency pair hovered above a 12-month low of 9.3766 ahead of the outcome of the Federal Reserve’s and Sweden’s Riksbank policy meetings.
The Fed is widely expected to leave its federal funds rate target range intact at 4.25%-4.50% at its June 17th-18th meeting.
The US central bank has adopted a wait-and-see approach amid concerns that the Trump administration’s tariffs could push inflation higher and slow GDP growth.
The minutes of the FOMC’s May meeting showed that Fed policy makers viewed the announced tariff increases as being significantly larger and more extensive than anticipated. What is more, policy makers warned of a substantial uncertainty surrounding the direction of trade policy as well as the scope, timing and duration of its effects on economy.
Fed officials considered this uncertainty as unusually high and cautioned that downside risks to employment and economic activity and upside risks to inflation had risen.
The new set of FOMC economic forecasts may offer further evidence of how policy makers perceive the impact of the Trump administration’s tariff policies.
Investors will also be paying close attention to the press conference with Fed Chair Jerome Powell for clues over the timing of any future interest rate cuts.
Meanwhile, Riksbank is expected to cut its key policy rate by 25 basis points to 2.00% at its June 18th meeting.
In May, Riksbank left borrowing costs on hold at 2.25%, highlighting increased global uncertainty, especially after a shift in US trade policy.
The global macro environment led to a slightly weaker Swedish economic outlook compared to March amid decreasing household confidence and early signs of heightening corporate pessimism.
Riksbank’s Executive Board said it was more likely that inflation will ease below the March projection. Back then, policy makers had said they expected inflation would remain above the 2% target for the rest of 2025 before stabilizing near that level in 2026.
The USD/SEK currency pair was last up 0.09% on the day to trade at 9.4725.
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