After a summer of higher-than-expected inflation readings, there is now a shift. In August, inflation was unchanged from the previous month at 0.7 percent according to the CPIF measure, which the Swedish Central Bank monitors particularly closely.
The result can be compared with the expected 0.9 percent according to Bloomberg's compilation of forecasts.
I would say that this completely closed the door to a rate increase from the Swedish Central Bank in September, says Robert Bergqvist.
His colleague at Danske Bank, Susanne Spector, is of the same view.
"It is a reassuring inflation outcome where we do not yet see any major effects in Swedish inflation figures from the global supply disruptions overall. This suggests that the first increase will come later this autumn," she says.
Raised interest rate forecasts
Recently, the major banks have been raising their interest rate forecasts. Everyone agrees that the next step from the Swedish Central Bank will be an interest rate hike. The only question is when.
While SEB, for example, believes that the increase will come after the turn of the year, Danske Bank's assessment is that it will happen in November.
Even though Sweden has a relatively good inflation situation from a global perspective, Robert Bergqvist reminds us that there are other factors that the Swedish Central Bank may need to take into account:
What I think could possibly stress the Swedish Central Bank is that the European Central Bank (ECB) will likely raise interest rates this week, he says.
He adds that there is also some probability that the US counterpart, the Federal Reserve (Fed), will also raise rates soon.
- So the Swedish Central Bank will make its decision in an environment where others are raising rates and I think that can make them stressed, even if they don't need to rush out.
Weakened krona
One consequence of other central banks raising rates and the Swedish Central Bank waiting is that the Swedish krona may weaken. This in turn may mean that imported inflation rises, as imported goods become increasingly more expensive when paid in kronor.
For example, the euro has risen and now costs 11.16 kronor compared with 10.88 kronor at the beginning of the summer.
It is unfortunate if you focus too much on the krona, but now it is already at a weak level again, says Robert Bergqvist.
