Swedish inflation back at target in relief to Riksbank

Bloomberg

Swedish inflation was back at the target in April, bringing comfort to the Riksbank as it struggles to bring interest rates back above zero after years of extreme monetary policy.
Consumer prices with a constant interest rate rose an annual 2.0% in April, according to Statistics Sweden. That was in line with the 2.0% predicted in a survey of economists, but just below the 2.1% estimate from the central bank. Riksbank Governor Stefan Ingves said the outcome was “good” and in line with forecasts.
“I can’t say that today’s inflation data changes anything when it comes to our rate path and our plan to raise rates,” Ingves told reporters after a speech on Tuesday. “If the world develops like we have forecast, then it’s reasonable to believe that our view will stand.”
Sweden’s central bank last month pushed back plans to raise rates again to potentially early next year after inflation missed its forecast for several months. The bank in December increased its key rate to minus 0.25%, its first tightening in seven years.
Central banks across the world are calling a halt to tightening amid slowing global economic momentum and still anemic inflation rates in many countries. Policy makers in Sweden have come under extreme criticism for their loose policy, which has caused the krona to tumble to near record low levels.
The bank last month also decided to prolong its bond buying program to the end of 2020. Underlying inflation measures were also in line with expectations. CPIF excluding energy reached 1.6 percent in April, in line with estimates from economists and the Riksbank. Cathrine Danin, senior economist at Swedbank, said, “The broad uptick in inflation, not only due to temporary and volatile factors, is welcome to the Riksbank.