Sweden inflation unlikely to steady at target level

The Sweden government is opted for a expansionary fiscal policy in near future, as the government is likely to present a deficit budget for coming three years. This will in turn, accelerate the growth rate of the economy. Therefore, the  National Institute of Economic Research (NIER) revised up its GDP forecasts for next two years. The institute forecasts, Sweden GDP is expected to expand by 3.5% in 2016 and marginally slow down to 2.7% in 2017.

Analysts anticipate, in addition to accelerate growth rate,  the expansionary fiscal policy will weigh on inflation also. 

"CPIF-inflation will rise gradually but not stabilize around the 2% target until 2018, according to the NIER's forecast. The repo rate is seen at -0.25% and 0.75% year-end 2016 and 2017, respectively, notes Nordea Bank.