Bloomberg News

Sweden Inflation Holds Below Target as Economic Growth Contracts

March 13, 2012

Swedish inflation held below target in February as the central bank cut rates to prevent the largest Nordic economy from entering a recession.

The inflation rate was an annual 1.9 percent, unchanged from the previous month, Statistics Sweden said today. That beat the 1.8 percent median estimate in a Bloomberg survey of 14 economists. Prices (SWCPMOM) rose 0.7 percent in the month. Adjusted for mortgage costs, inflation was annual 1.1 percent last month as prices rose a monthly 0.7 percent.

“The economic downturn has been considerably deeper than we predicted after fourth-quarter GDP (SWGDPWYY) came in so incredibly weak,” said Anna Raman, a senior analyst at Nykredit Bank A/S in Copenhagen, said before the report. “The Riksbank will cut rates one more time this year at its next meeting in April” before raising it in the second quarter of 2013, she said.

Sweden’s central bank lowered its main rate last month for a second meeting to 1.5 percent and predicted it will keep it unchanged over the next year to keep inflation close to its 2 percent target as exports, which account for about half its output, are under pressure from Europe’s debt crisis.

To contact the reporter on this story: Johan Carlstrom in Stockholm at jcarlstrom@bloomberg.net.

To contact the editor responsible for this story: Jonas Bergman in Stockholm at jbergman@bloomberg.net


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