Sweden's inflation still way below 2%

The Riksbank remains committed to lift inflation to its 2% target within short. Governors have been clear that they will be acting asymmetrically in response to surprises, i.e. the tolerance for negative inflation surprises is low. 

In April, the CPIF-inflation came in at 0.7% y/y, which was 0.3% points below the Riksbank's forecast. Unsurprisingly, speculations of an inter-meeting action rose. The reason that the Riksbank so far has stayed put is probably that the SEK remains rather weak.

Nordea Bank forecasts that the Riksbank will cut its repo rate to -0.40%, from currently -0.25%, at its scheduled meeting in July. 

"This will be the final easing measure in this cycle. However, the uncertainty of monetary policy remains exceptionally high, both if there will be more easing and if so which tools to be used. After a rate cut, the most likely tool is probably still to buy some more government bonds", says Nordea Bank.