Swedish inflation expectations remain largely unchanged, longer term expectations edge up

Swedish inflation expectations remained greatly unchanged in February. Longer term expectations on the CPIF continued to be below the 2 percent target. Prospera’s monthly survey showed that inflation expectations for one year stayed at 2 percent. Long term expectations rose. CPIF expectations for five years rose to 1.92 percent from 1.89 percent. Consumer price inflation expectation for five years rose to 2.02 percent from 1.98 percent. For two years, expectations remained unchanged at 2.1 percent.

CPIF expectations below the targeted raises some question marks for the central bank. If inflation would fall and come below the Riksbank’s inflation forecast, which is expected, inflation expectations might fall further, noted Nordea Bank in a research report. This is a challenge for the Riksbank and the reason to why the central bank is expected to stand pat in 2018, added Nordea Bank.

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