The change has been remarkable. A couple of weeks ago, it was estimated that there was around a 50 percent probability that the Swedish Central Bank would implement an interest rate cut in 2026.
After this weekend's developments with soaring oil prices, the situation is the opposite.
It has been repriced quite a bit. Right now an increase from the Swedish Central Bank is expected by September this year and another increase by September 2027, says Andreas Wallström, head of forecasting at Swedbank.
Leaves an impression
This is based on the fact that rising energy prices risk affecting inflation, something that the Swedish Central Bank must curb through interest-rate increases.
The Swedish economy is affected by the price of oil. Households are hit by higher fuel prices, which can lead to reduced purchasing power, says Wallström.
In addition to rising fuel prices, rising fuel costs can also cause companies to need to compensate for higher costs, which in turn drives inflation.
That effect can be at least as large and often comes with a delay. It may not become apparent until next year, says Andreas Wallström.
Do you see similarities with how events unfolded when the war in Ukraine broke out and inflation skyrocketed?
I can understand that concern. The inflation crisis of 2022 is fresh in my memory. Even then, the risks of individual energy price increases were downplayed, and there is such a risk even now.
Haven't rushed
However, Andreas Wallström points out a big difference now compared with then: gas prices have not risen as much.
Another difference is that we had a broader upswing in commodity prices; it wasn't just energy prices, and we haven't seen that yet, which means you shouldn't overreact.
What do you think?