Swedish inflation in focus
INFLATION. This week's focus is on Sweden and the inflation data that is due on Tuesday. In the US, Fed comments will be closely watched for confirmation that a December 50bps hike is becoming the main scenario.
Sweden: Significantly lower electricity prices will push the headline inflation (the measure of the total inflation within an economy) temporarily lower despite fuel prices adding 0.5pp to the monthly change in October. We expect energy prices to move higher later in the winter and although we see some signs of more modest price increases in international goods prices (mainly intermediate) longer time lag suggests we will see core inflation to continue edging higher for some time ahead.
Norway: Continued upside surprises to inflation has lifted rate hike expectations. This week’s inflation expectations survey (Thu) will show whether accelerating inflation continues to lift long-term inflation and wage expectations. Economic activity data will, in our view, also be decisive for the near-term policy outlook. Mainland GDP growth likely held up in Q3, but the monthly trajectory will show a slowing momentum (Fri) and consumer confidence is likely to deteriorate further (Tue).
US: Plenty of data, but Fed speeches will be of most interest. Deputy Governor Waller is among the more hawkish, and during this cycle has set the tone among his colleagues. During the weekend Waller downplayed the importance of a single month of inflation data. Waller signaled cautious optimism about cutting the tightening pace to a 50bps hike in December. However, the Fed still has some ways to go to the peak and interest rates will need to remain at high levels for some time.
Further reading: The latest edition of Nordic Outlook, the bank’s macroeconomic flagship report, will be released on Tuesday. Expect key forecasts as well as an analysis of trends and political decisions that affect the world economy: https://sebgroup.com/nordicoutlookreport