Sweden: Inflation rate is close to the 2% target - BNPP

Catherine Stephan, Research Analyst at BNP Paribas, explains that Sweden’s consumer price inflation with a fixed interest rate (CPIF), which is the target variable for monetary policy since September 2017, reached 2% year-on-year in March 2018.

Key Quotes

“It was bolstered by higher capacity utilization, the increase in energy prices and the depreciation of the krona against the currencies of Sweden’s main trading partners.”

“Inflation should remain slightly below 2% in 2018 and 2019. The continued sustained growth in GDP (+2.7% in 2018 and +2.1% in 2019 following +2.4% in 2017) should lead to an acceleration in wage increases and a rise in core inflation. However, the expected tighter monetary policy at the end of 2018 should be accompanied by an appreciation of the krona and downward pressure on prices despite the rise in inflation abroad.”