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Broad decline in inflation expectations

The Swedish Central Bank has, ahead of next week's interest rate meeting, received new reasons to lower the repo rate from today's 3.75 percent. Inflation expectations among monetary market actors are falling across the board, according to a report from Kantar Prospera.

» Updated: 18 September 2024

» Published: 15 August 2024

Broad decline in inflation expectations
Photo: Jonas Ekströmer/TT

In a one-year perspective, an inflation of 1.8 percent is expected according to the KPIF measure, according to the latest measurement. In the corresponding measurement from July, expectations were at 2.0 percent. And in a two-year perspective, an inflation of 1.8 percent is expected, compared to previously 2.0 percent.

Important factor

In a five-year perspective, inflation expectations are at 2.0 percent, compared to previously 2.1 percent.

Inflation expectations are, alongside inflation and other economic indicators, an important factor when the Swedish Central Bank makes decisions on the interest rate.

The KPIF inflation, which according to the Swedish Central Bank's inflation target should be at 2.0 percent, is an underlying inflation measure where the effects of mortgage rates have been excluded.

Kantar Prospera's measurements of inflation expectations are made on behalf of the Swedish Central Bank, whose next interest rate decision will come as early as next week.

Expectations of the Swedish Central Bank lowering the interest rate are increasing at the same time. In a three-month perspective, expectations of the interest rate among market players are at 3.3 percent, compared to previously 3.4 percent. And in a one-year perspective, expectations of an interest rate of 2.5 percent are expected, compared to previously 2.6 percent.

Growth expectations are being revised upwards

Expectations regarding market interest rates have also fallen to 2.0 percent in interest on a five-year government bond in three months, from previously 2.3 percent.

Growth expectations in a one-year perspective are being revised upwards slightly to 1.7 percent, from previously 1.5 percent. Growth in a two-year and five-year perspective is at 2.2 and 2.1 percent, unchanged compared to the July measurement.

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By TTThis article has been altered and translated by Sweden Herald

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