Swedish inflation data for February showed that both CPIF and CPIF excluding energy remained at low year-on-year levels, with seasonally adjusted core measures well below the Riksbank's 2% target, according to Nordea's Torbjörn Isaksson [1]. Although there was a bounce in core services inflation, overall inflationary pressures are subdued, and Nordea expects core inflation to decline further in the coming months [1]. The war in the Middle East and rising energy prices are anticipated to add approximately 0.5 percentage points to headline CPIF inflation in the near term, but the direct effects are not considered drastic, as the increase is from a low starting point [1]. Despite these factors, Nordea forecasts that the Riksbank will maintain its policy rate at 1.75% next week, adopting a wait-and-see approach due to significant uncertainty in the global environment [1]. The central bank has emphasized its readiness to take action if necessary, but for now, steady policy is expected [1].
CONCLUSION
Sweden's subdued inflation data supports Nordea's expectation that the Riksbank will keep its policy rate unchanged at 1.75% next week. While external risks such as the Middle East conflict and rising energy prices may slightly impact headline inflation, the overall market takeaway is stability and caution from the central bank.