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Soft Sweden inflation cuts odds for September Riksbank hike

Sweden’s August flash CPI came in at 0.28% year over year, easing market pricing for a first Riksbank move to November.

Reported · Written up by our desk · Central Banks

Markets digested a set of macro releases overnight, with Sweden’s August flash inflation print coming in below expectations and reducing the probability of a September Riksbank rate hike, according to Action Forex.

Sweden’s CPI was reported at 0.28% year over year versus 0.59% expected and 0.18% prior, while CPIF was 0.72% versus 1.00% expected and 0.72% prior. CPIF-XE was 0.52% year over year versus 0.74% expected and 0.57% prior.

Action Forex said the downside surprise was broad-based across both goods and services, with food and energy broadly in line with forecasts. It added that transport prices were higher month over month, but the category includes both fuel and air travel, limiting clarity on the underlying drivers.

In the rates outlook, the outlet noted markets had previously priced around a 30% probability of a September hike, but that implied probability was largely erased after the data. Action Forex expects the Riksbank to hike for the first time in November.

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