Swedish Inflation Avoids Setback in Relief for Central Bank

Swedish inflation avoided another setback in February, bringing relief to central bank policy makers even as price growth continues to lag behind their estimates.

After slowing for two straight months, underlying inflation was unchanged at 1.7 percent in February, according to Statistics Sweden. That was in line with economists estimates, but fell short of the Riksbank’s own 1.9 percent forecast. The krona rose 0.2 percent to 10.16 per euro as of 9:37 a.m. in Stockholm.

The bank formally ended its bond buying program at the end of December and have now started to plot a path to start lifting rates from the current minus 0.5 percent. But disappointing inflation data risks scuttling those plans as policy makers remain weary of a setback after long struggle to lift price growth.

Read more on the Riksbank and inflation here

A report on housing prices also added to speculation that the bank will have difficulties in starting its tightening cycle. After a recovery in January, property prices again slid last month. Home prices slid the most since 2008 in the fourth quarter, raising concerns the slowdown would impact economic growth.

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