Swedish Central Bank to face difficult decision

Riksbank is facing a dilemma ahead of today's meeting. The recent inflation data was not bad really, which would suggest leaving its monetary policy unchanged. On the other hand the Swedish central bankers will have to ask themselves whether sufficient autonomous inflation momentum may have been created so that further support from an expansionary monetary policy is no longer required. 

If the support ends too quickly inflation might collapse again. All previous efforts would have been in vain and Riksbank would once again be exposed to the criticism of sado-monetarism by left-leaning US economists. 

In similar situations many central banks decide in favour of a possibly excessively expansionary monetary policy, as deflation seems to be more difficult to fight than inflation. However, amongst Riksbank members this approach is unlikely to be uncontroversial. 

There is still widespread fear of a bubble on the property market. "Erring on the inflationary side" which the Fed can no doubt afford seems too risky to Riksbank.