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Swedish inflation below forecast, rate hike bets cut

Swedish inflation below forecast, rate hike bets cut

STOCKHOLM: Swedish consumer prices rose less than forecast in September, hardening expectations the central bank will hold policy unchanged until it sees clearer signs of a sustained pick-up in inflation. Underlying CPIF inflation, which excludes mortgage costs, was 0.2 percent on the month and 2.3 percent on the year, the Statistics office said on Thursday. That undershot analysts’ forecasts as well as the bank’s prediction of 2.4 percent.

The Swedish crown weakened sharply as markets bet the data had further cut chances that the Riksbank will tighten policy any time soon. “We have a central bank that is counting tenths of percentage points and this was a tenth lower (than expected), which makes it even less likely that they will do anything in October,” said Olle Holmgren, economist at SEB. CPIF inflation has been close to or above the Riksbank’s 2 percent target most of this year. But it argues it is too risky to start tightening policy as prices are not yet on a stable upward trend, predicting inflation will dip back below 2 percent again in coming months.