SWEDEN: Lower-than-expected April Flash Inflation; RB Guidance Tilt Possible
Swedish April flash inflation was lower than analyst forecasts: Headline CPIF at 2.3% Y/Y vs 2.29% Riksbank, 2.4% consensus and CPIF ex-energy at 3.1% Y/Y vs 3.15% Riksbank, 3.2% consensus.
- Consensus for CPIF ex-energy was skewed towards a firmer 3.2/3.3% reading, so the downward surprise is notable. However, there are no details provided in the flash release.
- As such, this shouldn’t have a major impact on today’s Riksbank Executive Board meeting and tomorrow’s policy rate decision. On the margin, it may increase the likelihood of a dovish guidance tilt, opening the door to a cut later this year conditional on downside growth risks materialising (which is our expectation).
- The policy rate is firmly expected to be held at 2.25%.
- EURSEK is up 0.15% following the release, but NOKSEK has already unwound the initial 0.20% move lower.
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Historical bullets
MNI: GERMANY FEB TRADE BALANCE E17.7BLN; JAN E16.2BLN
- MNI: GERMANY FEB TRADE BALANCE E17.7BLN; JAN E16.2BLN
- GERMANY FEB EXPORTS 1.8% M/M; JAN 0.0%
- GERMANY FEB IMPORTS 0.7% M/M; JAN 5.0%
USDJPY TECHS: Trend Needle Points South
- RES 4: 151.30 High Mar 3
- RES 3: 150.43/151.21 50-day EMA / High Mar 28 and reversal trigger
- RES 2: 149.12 20-day EMA
- RES 1: 148.18 Low Mar 20
- PRICE: 145.92 @ 07:07 BST Apr 7
- SUP 1: 144.56 Low Apr 4
- SUP 2: 144.13 76.4% retracement of the Sep 16 ‘24 - Jan 10 bull leg
- SUP 3: 143.43 Low Oct 2 ‘24
- SUP 4: 142.95 1.00 proj of the Feb 12 - Mar 11 - 28 price swing
USDJPY maintains a softer tone following last week’s sharp sell-off and is trading just ahead of its recent lows. A resumption of the downtrend and a break of Friday’s 144.56 low would signal scope for an extension towards 144.13, a Fibonacci retracement point. Initial firm resistance to watch is 149.12, the 20-day EMA. Short-term gains would - for now - be considered corrective.
RIKSBANK: VIEW: Swedbank Now See 25bp Riksbank Cut In August
Swedbank now see the Riksbank delivering one more 25bp cut in August to 2.00%, after previously expecting rates to remain unchanged at 2.25% for the remainder of 2025.
- They note that the “weaker economic outlook, stronger SEK, and inflation in line with the Riksbank forecast calls for monetary policy easing”.
- “After last week’s announcement of US tariffs including the reciprocal tariff on the EU of 20%, we have downgraded our GDP forecast for Sweden by half a percentage point to around 1.5% in 2025”
- “The March flash CPIF-inflation outcome was exactly in line with the Riksbank forecast which, together with the recently settled two-year collective wage agreements in the manufacturing sector, takes away some upside risks to the inflation forecast”.
- “Depending on data outcomes during the spring, the policy rate could be lowered already in May or June, but we believe that it is most likely to occur in August after communication in the Monetary Policy Report in June”.
