Inflation rose to 1.7 percent in July according to the CPIF metric, up from 1.3 percent in June, reports Statistics Sweden.
CPIF, the consumer price index with mortgage rates taken out of the equation, is the inflation measurement used by the Swedish central bank, the Riksbank, whose goal is that inflation should remain relatively stable at around the two-percent mark.
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Bloomberg reports that analysts had expected CPIF inflation to land at 1.6 percent.
The consumer price index including mortgage rates (CPI) remained unchanged at 2.6 percent. Analysts had predicted 2.5 percent.
Despite the higher-than-expected inflation, the Riksbank is still expected to lower the policy rate by 0.25 percentage points next week.
That would put the policy rate, which is Sweden’s main interest rate, at 3.50 percent.
The policy rate is the central bank’s main monetary policy tool. It decides which rates Swedish banks can deposit in and borrow money from the Riksbank, which in turn affects the banks’ own interest rates on savings, loans and mortgages.
If bank interest rates are high, it’s expensive to borrow money, which means people spend less and as a result inflation drops.
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