Swedish inflation figures should not surprise the market, according to economists. Nevertheless strengthened against Norwegian kroner Swedish.
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Consumer price index in Sweden were down 0.3 percent on a monthly basis in July. On an annual basis, prices were unchanged.
according to figures from Statistics Centralbyrån, according Nyhetsbyrån Direkt.
In advance, it was expected that the consumer price index would show a decline of 0.4 percent month basis, prices on an annual basis was expected to be unchanged, according to estimates obtained by SME Direkt.
KPIF (CPI excluding mortgage interest) was down 0.2 percent in July on a monthly basis and were up 0.6 percent over the year. KPIF were expected up 0.6 percent on an annual basis.
Cheaper SEK
Tuesday, the Norwegian krone been stronger against the Swedish. Tuesday morning costs 100 Swedish kronor around 89.76 Norwegian kroner. Before inflation figures were known cost 100 SEK 89.95 Norwegian kroner.
This is according Haugland the opposite of the expected movement.
– This is illogical, normally one would have thought that the Swedish krona strengthened. But inflation figures we saw for July in Norway yesterday, was really a surprise. The effect can be explained possibly be explained by this, says senior economist Kjersti Haugland DNB Markets.
She explains that the Swedish and Norwegian krone often “infects” other.
– The Swedish and Norwegian crown often moves in tandem. When the Norwegian kroner infected, it may therefore lead to a null effect.
Also Steinar Juel chief economist at Nordea Markets, the reaction surprising. He does not think the trend will be long lasting.
– The market reacted by sending Swedish krona slightly weaker. This is strange, really, one should instead have breathed a sigh of relief.
– No worries
– It is not surprising, the numbers are slightly better than the Riksbank had expected and does not Due to some concern that the Riksbank will take hold of now, says Juel.
He points out that the central bank cut interest rates “good” in the summer, and therefore will not be small in the near future.
– It is expected that inflation will pick up in the autumn. Underlying inflation was higher than expected for July.
Interest rate cuts less likely
– There is inflation when we ignore the effect that the interest effect has the Riksbank, KPIF, which is important for monetary policy. The annual growth in KPIF we see that declined slightly to 0.6 percent year over year. This was as expected, but the Riksbank had a positive estimate of 0.4 percent, says Haugland DNB Markets.
She points out that Swedish inflation is “very” low.
– But this was a positive surprise for the central bank to cut interest rates by half a percentage point in July. The Riksbank has said that they are ready to cut more, but now the interest rate down to 0.25 percent – so they have plenty of room to cut more.
Haugland points out that estimates the central bank has been consistently higher than expected, and the current figures lowers the risk of another interest rate cut.
– It is important for Norway and Norwegian interest rate setting what happens in Sweden. The Swedes came with rate cuts have contributed to lower interest rate expectations in Norway. Both we and the central bank expects inflation will pick up.
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