STOCKHOLM (Reuters) – There are upside and downside risks for inflation in Sweden and the central bank has to be watchful and ready to act if needed, Riksbank First Deputy Governor Anna Breman said on Friday after data this week showing an uptick in price pressures.
“We need to be prepared to act and at the same time we need to remain calm and really look at the data that comes in … on where inflation and the economy are heading,” she said.
Headline inflation picked up pace in February, flash figures from the Statistics Office showed on Thursday, the second month in a row in which inflation has surprised on the upside.
Breman said that January inflation had been impacted by regular changes to the basket of goods sampled by the statistics office, while flash data for February contained no details on what was behind the unexpected pick up in price pressures.
“What wasn’t good, though, was that CPIF ex energy also rose more than expected (in February),” she said. CPIF ex energy is a measure of headline inflation excluding volatile energy prices.
Nevertheless, Breman said there were still good prospects for inflation to stabilise around the central bank’s 2% target, including the recent strengthening of the Swedish crown.
“We have stable inflation expectations, we have moderate wage rises in Sweden, we have inflation that has … clearly fallen back close to 2%, so the conditions for low and stable inflation are good, even in an uncertain world.”
The Riksbank announces its next policy decision on March 20. Analysts expect no change in rates.
(Reporting by Simon Johnson, editing by Terje Solsvik and Louise Heavens)
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