Sweden\u2019s January CPIF inflation was confirmed at 2.0%, while CPIF excluding energy was confirmed at 1.7%. Services inflation provided the main downside surprise.<\/p>\n
Core services inflation (excluding foreign travel and administratively set prices) fell and came in below expectations. Car rental prices dropped, and hotel accommodation prices also fell, described as seasonal.<\/p>\n
Goods prices declined as well, but by less than expected. The details were described as pointing towards a more accommodative policy stance, with an expectation of a lower projected inflation path.<\/p>\n
The Riksbank policy rate is currently expected to remain on hold at 1.75%. A rate cut is noted as possible.<\/p>\n
The article was produced using an AI tool and reviewed by an editor.<\/p>\n
Swedish inflation has come in softer than anticipated, particularly within the services sector. This surprise suggests the Riksbank will adopt a more dovish stance in its upcoming meetings. The data increases the probability that the central bank will consider cutting its policy rate from the current 1.75% level.<\/p>\n
Recent data confirms the January CPIF rate is now at 2.0%, a significant drop from the levels above 3.5% that we observed for much of 2025. This brings inflation directly to the Riksbank’s target, giving them considerable room to ease policy if the economy weakens. This trend contrasts with the European Central Bank, which is still grappling with core inflation that is proving to be stickier.<\/p>\n
Given these conditions, we see value in positioning for lower Swedish interest rates over the next several weeks. Traders should consider entering positions to receive the fixed leg on Swedish interest rate swaps (IRS). This strategy stands to benefit if the Riksbank signals or enacts a rate cut later this year.<\/p>\n
The prospect of a rate cut also implies weakness for the Swedish krona, as lower yields make the currency less attractive. We believe the path of least resistance for the EUR\/SEK pair is higher from its current level of around 11.25. Derivative traders could look at buying EUR\/SEK call options to capitalize on this potential move with defined risk.<\/p>\n
This entire view is based on a growing policy divergence between a newly dovish Riksbank and other major central banks. Reviewing their actions in 2025, the Riksbank was one of the later central banks to pause its hiking cycle. This sharp pivot, driven by collapsing services inflation, suggests they could now be among the first to start cutting rates.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Sweden\u2019s January CPIF held at 2.0%, core 1.7%; services-driven downside surprise boosts odds of Riksbank cut.<\/p>\n","protected":false},"author":62,"featured_media":17027,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42439","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42439","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=42439"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42439\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17027"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}