Swedish inflation fell to a nearly 30-year high in January, but rising underlying price pressures could force the reluctant central bank to speed up policy tightening.
At the most recent meeting, a divided Riksbank generally kept its policy plans unchanged, commenting that the rise in inflation was temporary and mainly due to energy prices.
But higher-than-expected price pressures in January could upset the balance in their favor, bringing even faster rate hikes.
“Our basic scenario is that the Riksbank will reduce its balance sheet from the third quarter, but will keep the refinancing rate unchanged,” said a Nordea economist.
“There is a lot going on around the world, but rising inflation is increasing the likelihood of a rate hike this year.”
Consumer prices in Sweden fell 0.5% in January from the previous month and rose 3.9% from the same month last year.
Underlying price pressures, which do not include volatile energy prices, and which is a key measure monitored by the central bank, increased to 2.5% compared to January 2021.
This is the highest increase since February 2009.
Source: Capital
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