Riksbank Expected to Hold Rates, Signals Chance of Hike Later in Year
Sweden's Central Bank Policy Outlook Amid Global Inflation Concerns
Riksbank's Upcoming Policy Decision
STOCKHOLM, June 15 (Reuters) - Sweden's central bank will keep its policy rate on hold later this week, but signal an increased chance of a hike later this year to keep a lid on price pressures sparked by the Iran war, a Reuters poll of economists showed on Monday.
Economists were almost united in seeing no change, with only one bank out of a total 19 forecasting a quarter-point hike when the Riksbank announces its policy decision on Wednesday.
"We expect the Riksbank to shift to a gentle explicit tightening bias," J.P. Morgan said in a note. "We continue to look for a September hike, but with risks of later move."
Global and Regional Inflation Dynamics
Impact of Middle East Conflict on Inflation
Rate-setters across the globe are trying to gauge the long-term effects of the conflict in the Middle East on inflation, with the European Central Bank the first major central bank to act when it tightened policy last week.
Sweden's Unique Position in Europe
The Riksbank is in less of a hurry. Sweden has stood out in Europe in enjoying moderate cost pressures in recent months with underlying inflation at zero in April - the lowest for 30 years.
Sweden's fossil-free energy mix has muted the effect of higher oil prices, while temporary tax cuts and a stronger crown currency have dampened import prices.
Emerging Inflationary Pressures in Sweden
Producer and Input Price Trends
There are signs, however, that inflation pressure is building.
Producer prices rose in April at their fastest pace since early 2023. Input price inflation in the manufacturing and service sectors was also at a multi-year peak.
Consumer Price Outlook
How much of this gets passed on to consumers, however, remains to be seen. The Riksbank's own survey of businesses showed only modest price hikes ahead.
Market Expectations and Analyst Views
Forecasts for Future Rate Hikes
All but four banks saw a hike ahead, but analysts were divided over when, with eight predicting a hike this year.
Riksbank Poll Data
For Riksbank poll data, click here
(Reporting by Johan Ahlander and Simon JohnsonEditing by Tomasz Janowski)
