RPT-BUZZ-COMMENT-Inflation data a double-edged sword for the crown

EUR/SEK price changes in last paragraph

Feb 18 (Reuters) - A significant rise in Swedish inflation has ramifications for monetary policy, the crown and economic growth. A steady interest rate stance is SEK supportive, but detrimental to Swedish growth and could lean on investor sentiment.

The jump in Swedish inflation in January strongly suggests the Riksbank's easing cycle might be over and the initial market reaction has been to maintain the crown's recovery versus the euro.

The Riksbank's 2.0% CPIF inflation target has been exceeded. The number for January is clear above the central bank's 1.8% estimate at 2.2% y/y, and significantly higher than the Reuters poll consensus of 1.6%. Excluding energy, CPIF rose 2.7% y/y, again above the Riksbank's call and up from December's 2.0% print.

Confirmation of the preliminary release suggests a rate cut in March can be ruled out and our forecast for a cut in May now appears increasingly uncertain.

EUR/SEK has fallen below the 11.2970 low from October and the double day 11.2450 low from September and targets the 1.1450 low from June 2024, but progress towards this support point might be slowed if the Swedish economy begins to show signs of stress and inflation becomes entrenched above 2.0%.

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