Sweden’s January CPIF inflation was confirmed at 2.0%. CPIF excluding energy was confirmed at 1.7%. The main downside surprise came from services inflation. Core services inflation (excluding foreign travel and administratively set prices) fell and was below expectations. Car rental prices dropped, and hotel accommodation prices also fell, which was described as seasonal.

Implications For Monetary Policy

Goods prices also declined, but by less than expected. The details were described as supporting a more accommodative policy stance, with expectations for a lower projected inflation path. The Riksbank policy rate is currently expected to stay on hold at 1.75%. A rate cut is seen as possible. The article was produced using an AI tool and reviewed by an editor. Swedish inflation came in lower than expected, especially in services. This surprise suggests the Riksbank may take a more dovish approach at upcoming meetings. The data also raises the chance that the central bank will consider cutting the policy rate from its current 1.75%.

Trading And Market Implications

The latest data confirms January CPIF at 2.0%. This is a clear drop from the levels above 3.5% seen for much of 2025. Inflation is now back at the Riksbank’s target, which gives it more room to ease policy if the economy weakens. This contrasts with the European Central Bank, where core inflation remains more persistent. Given this backdrop, we see value in positioning for lower Swedish interest rates over the coming weeks. Traders could consider receiving the fixed leg on Swedish interest rate swaps (IRS). This approach can benefit if the Riksbank signals or delivers a rate cut later this year. A potential rate cut could also weaken the Swedish krona, since lower yields can make the currency less attractive. We think the EUR/SEK pair is more likely to move higher from its current level around 11.25. Derivatives traders could consider buying EUR/SEK call options to express this view with defined risk. This view is based on widening policy divergence between a newly dovish Riksbank and other major central banks. In 2025, the Riksbank was among the later central banks to pause its hiking cycle. This faster shift—driven by falling services inflation—suggests it could now be among the first to start cutting rates. Create your live VT Markets account and start trading now.

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