US inflation as measured by the CPI rose to 3.7 percent in September, up from 3.4 percent the previous month.
This was slightly higher than the market forecast of 3.6 percent on average and the highest annual figure since May. One reason is sharply rising energy prices: gasoline prices, for example, rose 9.1 percent. Core inflation, which excludes food and energy prices, also increased.
This has led the market to believe that an interest rate hike by the Federal Reserve is becoming more likely. After Wednesday’s figures, the probability of a hike at the next monetary policy meeting in October is estimated at 50 percent.
In theory, US interest rate increases could also affect Sweden by giving the Swedish Central Bank (Sweden’s central bank) room to raise its policy rate.
“For Sweden, this could mean continued high financing costs for companies and high interest rates on mortgages with longer terms. It is simply a cold shower for the fixed-income market,” Alexandra Stråberg, chief economist at Länsförsäkringar, wrote in a comment.
