Swedish Inflation

Bank Economists: Tougher Times Ahead for Swedish Households

Rising inflation, higher interest rates, and less expansionary fiscal policy point toward tougher times ahead for Swedish households. This is the assessment of SEB and Swedbank in their economic forecasts, reports TT.

“I wouldn’t call it a dramatic deterioration for households, but there are certainly some headwinds. It’s possible that—if the party isn’t quite over—we are at least shifting into a lower gear,” says Jens Magnusson, Chief Economist at SEB, to TT.

Swedbank predicts that growth in the Swedish economy will slow down significantly going forward.

Both banks anticipate that inflation next year will exceed the Riksbank’s 2 percent inflation target. 

Riksbank Official Signals Possibility of Another Hike as Early as December

The Riksbank, acting unanimously, raised the policy rate to 2 percent last week; however, the minutes reveal that the members held somewhat differing views on how quickly the rate might need to be raised in the future.

Per Jansson did not rule out another hike as early as December. In total, he expects roughly two more increases over the coming year, in line with the Riksbank’s own forecast.

Riksbank Governor Erik Thedéen continues to favor gradual hikes, but he warned of a potential global scenario in which rising inflation could necessitate “a few more” interest rate increases. Aino Bunge instead emphasized the risk that overly rapid hikes could slow the economic recovery.

The day after the interest rate announcement, preliminary figures showed that inflation in October was significantly lower than expected.