Riksbank inflation equation still "impossible"

Last week's Swedish inflation numbers were higher than the market expected and in line with the Riksbank forecast. CPIF excluding energy was 1.8% y/y and, thus, very close to the inflation target. With that background it is felt that a brief reminder is in place regarding the Riksbank's medium term inflation forecast that it is still found too high.

For the second consecutive month, inflation was exactly what the Riksbank has expected and CPIF excluding energy (1.8% y/y) has now been on a clear upwards trend since early 2014. 

Does this mean that Swedish inflation has turned a corner and will move back to and above the 2% target. The Riksbank thinks so, but Nordea Bank says they do not. According to them, the last 15 years CPIF excluding energy has surpassed and stayed around 2% only when both,

• i) SEK has weakened massively, 
  
  
• ii) wage growth has been 4% y/y or higher