Sweden Riksbank’s dilemma

The CPIF inflation reading is expected to come in at 0.6% y/y in July by Nordea bank, which is 0.1% point lower than the Riksbank's forecast. The Riksbank expects very low energy prices over the coming months. 

The reason for the differing forecasts is that the underlying inflation pressures are more subdued than assumed by the Riksbank.

"Longer out, a CPIF inflation reading for December is expected at 1.4%, which is significantly below the Riksbank's forecast of 1.8%. For 2016, the forecasts differ even more. Barring any unexpected supply shock within eg energy or food, the CPIF inflation will not reach 2% except perhaps for a single month", says Nordea Bank.