COMMENT-Justifying a Riksbank rate cut becomes increasingly challenging

March 6 (Reuters) - A fragile Swedish economic recovery presents a rate cut case, but the Riksbank is having to refocus its policy efforts on inflation and as such, further interest cuts are unlikely.

Swedish flash inflation data for February surprised to the upside with the year-on-year CPIF measure nearly a full percentage point above the Riksbank's 2.0% target. The 2.9% return was above the Reuters poll consensus of 2.7% and clear above the 2.2% Riksbank estimate.

The Riksbank has cut its benchmark rate by 175-basis points since May 2024 and there had been expectations of one or possibly two more cuts before the easing cycle ended. We now see Swedish rates held at 2.25% for the entire forecasting period, up to December 2026.

The pick-up in Swedish consumer prices cannot be blamed on a weakening crown. The currency has appreciated by around 9% since basing at 11.9950 in September 2023. This week has seen EUR/SEK drop to levels not seen since December 2022. Of more significance is the removal of the 200-week moving average at 11.00. It was August 2022 the last time EUR/SEK was below this important support point.