Nordea’s Torbjörn Isaksson notes that Swedish January CPIF and CPIF ex energy were confirmed at 2.0% and 1.7% respectively, with services inflation the main downside surprise. He describes the details as dovish and expects to lower the inflation path. Nordea currently sees the Riksbank on hold at 1.75%, while acknowledging a rate cut is possible.

Services weakness underpins dovish stance

"The main surprise on the downside was prices for services. Core services inflation (ex foreign travel and administrative set prices) declined and was lower than we had expected. Car rental plunged and prices for hotel accommodation fell too, which is seasonal."

"However, the low services inflation is probably concerning for the Riksbank. Prices for goods fell, but less than expected."

"All in all, our instant view is that the details are “dovish”. We will look through all details and update our inflation forecast in the coming days, but we will most likely lower the inflation path."

"For now we keep our view that the Riksbank will stay on hold at 1.75%, but a rate cut is indeed possible."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)