Sweden's core inflation and overall inflation exceeded expectations in September, providing support for the Swedish central bank to raise interest rates again next month. Data released by the Swedish Bureau of Statistics on Friday showed that the consumer price index, excluding energy and interest rate changes, rose 6.9% year-on-year, higher than economists' consensus expectation of 6.7% and the Swedish central bank's previous prediction of 6.6%.
At the same time, the year-on-year increase in overall inflation in Sweden in September decreased from 4.7% in August to 4.0% (due to a 45% year-on-year decrease in electricity prices), but it was higher than the expected 3.8% by the Swedish central bank. The Swedish central bank expects the overall inflation rate to stabilize around the target of 2% in the second half of next year.
Before the latest inflation data was released, economists still had disagreements on whether the Swedish central bank had ended raising interest rates or would raise them by 25 basis points at the policy meeting on November 22nd. However, a new survey released on Thursday showed that market participants' expectations for long-term inflation remain unchanged, while their expectations for short-term interest rates have decreased.
After the release of core inflation data in September, economist Johan Lof from Commercial Bank of Sweden said, "This strengthens our expectations for the Swedish central bank to raise interest rates in November, but the cooling trend in inflation may keep interest rates unchanged
Although interest rates may be approaching their peak, the Swedish central bank is still concerned about the rapid rise in service prices. At last month's policy meeting, members of the Executive Board of the Swedish Central Bank stated that due to the still high inflationary pressure and the weak Swedish krona leading to an increase in imported commodity prices, they may have to further tighten monetary policy.
Economist Selva Bahar Baziki said, "Sweden's higher than expected inflation data has disappointed the Swedish central bank. We expect the Swedish central bank to maintain interest rates at 4% unchanged at its policy meeting in November, but the risk of raising rates has now increased