According to James Smith, developed markets economist at ING, Sweden’s latest dip in headline CPIF, and the fact that it is likely to remain below target for the rest of this year, is unlikely to faze the Swedish Riksbank
Key Quotes
“On the face of it, the slide in headline Swedish inflation (CPIF) from 2.1% in May to 1.7% in June may seem disappointing. In reality though, much of this has to do with energy prices and is partly down to the fact that electricity prices were soaring at the same time last year as a result of the warmer weather.”
“Importantly, the Riksbank has already factored all of this into its forecasts and in fact the June CPIF figure was slightly above what they had anticipated in the latest inflation report. In principle then, there’s nothing in these latest figures to alter the Riksbank’s guidance that rates could rise again as soon as late-2019.”
“Throw in the risks that global trade tensions could pose for Sweden’s relatively open economy, and we think rates are likely to be kept on hold for the foreseeable future by the Riksbank.”
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