Inflation in the USA unexpectedly fell in May. On the stock exchange, it was thumbs up, even in Stockholm – as it opens up for interest rate cuts from the USA's central bank.
Good, but it's not enough, comments a financial analyst.
Stock exchanges rise, market interest rates are pressed down, and the krona strengthens significantly against both the dollar and the euro. Good news for financial markets, in other words.
It's a good figure. But it's not enough with one good figure for the Fed. They need to get more, says Elisabet Kopelman, USA analyst at SEB.
But it was enough to bring an interest rate cut from the American central bank (Federal Reserve) closer, according to the pricing on the interest rate market.
Normal level
Inflation in the USA fell to 3.3 per cent in May. This can be compared with 3.4 per cent in April. Analysts had calculated that inflation – price changes on an annual basis – would remain at the same level as in April.
Even the underlying inflation – adjusted for food and energy prices – fell from 3.6 per cent in April to 3.4 per cent in May. There, analysts had calculated 3.5 per cent.
The level of underlying inflation is now the lowest in over three years.
At a historically normal pace, says Elisabet Kopelman.
There's a limit
Even for the Swedish part, it's good news for those hoping for lower interest rates. Although the Riksbank has shown that it dares to take the lead, notes Kopelman.
But there's perhaps a limit also somewhere for how quickly the Riksbank can move forward, she says.
The next interest rate decision from the USA's central bank, the Federal Reserve (Fed), is expected at 20:00 Swedish time tonight (Wednesday), but then no interest rate cut is expected.
Prior to the inflation figure, the market calculated with an interest rate cut this year from the Fed, starting in the autumn. After the inflation figure, the probability increased in the pricing to two interest rate cuts.
