CPIF ex-energy and GDP Forecasts Unchanged, Unemployment Higher and KIX Lower

The revised set of CPIF-ex energy and GDP forecasts in the Monetary Policy Report are broadly unchanged vs September, but the unemployment and exchange rate forecasts have been updated to reflect recent developments since the last meeting.

• The path of unemployment has been shifted up 29bps to 8.30% in Q4 2023 (vs 8.01% prior), and 14bps to 8.26% in Q4 2025 (vs 8.12% prior).
• The KIX index forecast has also been revised downwards (indicating a stronger SEK), reflecting the 4% fall in the index between meetings.
• The monetary policy report contains "Alternative scenarios" for inflation and the policy path, which gives an insight into the Riksbank's thinking/concerns at the current stage. In June, the scenarios focused on a weaker/stronger SEK than expected, while in September they looked at higher/lower inflation than the central forecasts.
• This month, the Riksbank looks at company margins and demand. If margins were increased and inflation rises, policy will be tighter. On the other hand, if demand in Sweden was lower, rate cuts could begin earlier.
• The inclusion of the second scenario re bringing forward policy cuts could be viewed by markets as a more likely scenario than further rate hikes come 2024, given the deteriorating Swedish economy.