Swedish Riksbank Signal Rate Hike, Phases Out Core Inflation Target
Anyway, the practical implication of this is to make the Riksbank more hawkish, as the all-items index has increased more than the core index. Considering this, the Riksbank seems almost certain to raise interest rates soon, and will probably do it more later this year. Considering that although M2 growth has slowed, it is still near 10%, that is arguably justified. It remains to be seen whether the short term negative growth effect of this tightening will be enough to push Sweden into a recession, or whether the positive effects from the government's tax- and unemployment benefit cuts can prevent this. But it seems very clear that Swedish growth will slow significantly.