In June, inflation fell to 1.3 percent according to the KPIF measure. It was an unexpectedly large decline and the lowest level since 2020. It was also significantly below the Swedish Central Bank's target of 2 percent.
On Wednesday, SCB will release figures for July, and according to the Swedish Central Bank's forecast, inflation is expected to rise to 1.8 percent according to the KPIF measure, where the costs of household borrowing rates are excluded.
But according to both Nordea's and SEB's forecasts, inflation will not rise as much, but to 1.6 percent and 1.5 percent, respectively.
It's a small increase from last month, but it's still below the Swedish Central Bank's target, says Jens Magnusson, chief economist at SEB.
The increase is due to so-called base effects in energy prices, which fell sharply in July last year but not as much this year.
There are clouds of concern
According to Nordea's chief analyst Torbjörn Isaksson, one should not interpret the increase as alarming, but he also adds that monthly figures are volatile and that there is always uncertainty in forecasts.
Inflation can be both higher and lower, he says.
But it would take a lot for the Swedish Central Bank not to lower the interest rate in August, according to both. On the other hand, there are clouds of concern – for example, that the Swedish krona weakens due to market uncertainty.
The krona is one of the few factors that could cause trouble. But it would require quite significant weakening, continues Torbjörn Isaksson.
And in such cases, it would likely lead to them hesitating about lowering in September and November.
Double rate cut in August?
Jens Magnusson, however, believes that the shaky market may instead lead to more interest rate cuts.
The Swedish Central Bank is not controlled by the stock market, but if a general economic uncertainty spreads, it speaks in favor of the Swedish Central Bank lowering the interest rate more rather than less.
The Swedish Central Bank has signaled that there may be up to three more interest rate cuts this year, which SEB also believes will happen. But Nordea's forecast is that there will be four.
Neither Torbjörn Isaksson nor Jens Magnusson believes in a double rate cut in August. But at the same time, they do not rule it out.
A double rate cut is more likely right now than no cut at all. But the main scenario is a cut of 25 points, says Magnusson.
It is more likely with four single cuts during the autumn than using double cuts.
