January CPIF Should Remove Outside Of March Rate Cut

EURSEK drops 18 ticks as January CPI comes in above consensus on an annual basis for headline CPIF (3.3% Y/Y vs 3.1% cons, 2.3% prior). CPIF ex-energy is in line with forecasts at 4.4% Y/Y though which is seemingly limiting the move.

• The Riksbank had forecasted CPIF ex-energy at 4.51% Y/Y, meaning the forecast gap between the Riksbank's November MPR and the actual inflation readings falls to -0.1pp (from -0.3pp in December and -0.5pp in November).
• We had noted before today's print that the bar to early rate cuts is quite high. On the surface, the MNI Markets Team believes today's reading makes the outside chance of a March rate cut near-zero, and a cut in May quite a bit more unlikely.
• On Thursday, SEB estimated that markets were pricing 0bps of cuts through the March meeting and -16bps through the May meeting.
• A reminder that a June cut from the Riksbank is also likely to align more closely to the easing cycles of the ECB and the Fed, which should protect the SEK from additional weakness.