Sweden’s plans to loosen monetary policy in August have taken a hit. The latest data shows that inflation unexpectedly jumped to 2.9% in June, significantly exceeding analysts’ forecasts and casting doubt on whether the central bank will proceed with its planned interest rate cut.

🔹 Sharp Increase Compared to May

In May, the country’s CPIF inflation rate (which excludes mortgage interest costs) stood at 2.3%, and most June forecasts ranged between 2.4% and 2.5%. Sweden’s central bank, the Riksbank, had itself hoped for 2.4%. But the actual figure of 2.9% caught even seasoned analysts off guard.

Economist Johan Lof from Svenska Handelsbanken called the numbers a “significant surprise in terms of inflation growth,” warning that this spike adds uncertainty to the Riksbank’s upcoming August meeting.

💼 Markets Adjust Expectations

Market pricing has already reacted. While traders previously expected an 8 basis point cut in August, that projection has now dropped to just 7 basis points. Some investors believe a more significant move might be postponed until September, possibly with a 17 basis point cut.

Riksbank Governor Erik Thedéen and four other policymakers are scheduled to meet on August 19 to assess the situation. At their last meeting on June 18, they reduced the policy rate by 25 basis points and suggested more cuts could follow later this year—if inflation allowed.

⚠️ SEB and Nordea Sound the Alarm

SEB analyst Johan Javeus noted on X that the June inflation spike was a major obstacle and told those hoping for an August cut: "Think again."

Meanwhile, the Nordea financial group stated that its baseline scenario assumes the Riksbank will hold rates steady at 2.00%, and that the new inflation data reinforces this stance.

🌍 Eurozone Inflation Holds at 2%, but Risks Remain

While Sweden struggles with rising inflation, the eurozone remains relatively stable. According to Eurostat, eurozone inflation stands at 2%, precisely the target of the European Central Bank (ECB).

In June, inflation in Germany unexpectedly dropped to 2%, while France and Spain recorded slight increases. Overall, the situation is within expectations, and ECB is widely expected to keep its key deposit rate unchanged at 2% during its late July meeting. A final 25 basis point cut may follow in September.

🛢️ External Risks: Oil, Tariffs, and Geopolitics

ECB Chief Economist Philip Lane said the "main disinflation phase—from a peak of 10% to 2%—is now behind us." However, he emphasized that policymakers must remain alert to new disruptions.

These include:

🔹 Donald Trump’s tariff policy, which could impact global trade

🔹 Volatile oil prices

🔹 Tensions in the Middle East

Domestic data in Sweden also reflects a slowing economy: consumer confidence and the manufacturing PMI have both declined in recent months.

🔍 Summary

While the eurozone remains within its inflation target range, Sweden faces renewed inflationary pressure that may force the Riksbank to reconsider its monetary easing plans. The upcoming August policy meeting is shaping up to be a critical moment, and investors are watching closely.



#globaleconomy , #TRUMP , #Tariffs , #Geopolitics , #worldnews

Stay one step ahead – follow our profile and stay informed about everything important in the world of cryptocurrencies!

Notice:

,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“