SWEDEN
Swedish March CPI is due tomorrow, with analysts expecting CPIF ex-energy at 3.2% Y/Y (vs 3.5% prior) and CPIF at 2.6% Y/Y (vs 2.5% prior). The Riksbank’s March MPR forecasted CPIF ex-energy at 3.3% Y/Y and CPIF at 2.7% Y/Y.
- This is the only CPIF report before the Riksbank’s May 8 meeting, and thus will be pivotal in determining whether the Executive Board can confidently cut rates ahead of the ECB and the Fed.
- Markets currently price 14bps of rate cuts through the May meeting, according to estimates from SEB.
- If the data prints in line with the Riksbank’s forecast, it would tilt expectations further in favour of a May rate cut. However, the development of the SEK between now and the May meeting will still be a key input before cementing that case (we also note that Q1 GDP appears to be tracking above the current forecasts, an additional hawkish factor on the margin).
- A higher-than-expected reading (vs the Riksbank’s forecast) may tilt favour back towards a June cut though, especially when coupled with the hawkish impetus of yesterday’s US CPI data on the Fed policy outlook (and therefore the SEK).
- Analysts note that services prices may pose upside risks to tomorrow’s print, particularly from travel-sensitive components owing to the early Easter-weekend this year.
- See the image below for a selection of analyst views:
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