Commerzbank’s Antje Praefcke expects Swedish inflation to stay below target and sees little chance of a near-term Riksbank cut. She argues the bank will focus on upside inflation risks from the energy shock and downside risks to growth, with March likely too early for policy changes even if forecasts in the monetary policy report are adjusted.
Low inflation but no quick rate cuts
“The Riksbank expects both inflation rates to fall well below the inflation target by the end of the year before stabilizing close to it.”
“However, it will likely be some time before it adjusts its monetary policy accordingly.”
“To make matters worse, the outlook for inflation has deteriorated in light of the energy price shock.”
“No central bank is likely to consider lowering interest rates again quickly before it is clearer how long the Iran conflict and high energy prices will last.”
“However, this report is likely to continue to be dominated by references to the upside risks for inflation and the downside risks for the real economy.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Source: https://www.fxstreet.com/news/sek-riksbank-to-watch-risks-before-easing-commerzbank-202603110932