Lean times await

Today, Sweden's inflation rates for the month of March were presented. Both the Consumer Price Index (CPI) and Consumer Price Index for All Urban Consumers: All Items Less Food and Energy (CPILFESL) also known as Core CPI was lower than the market expected.

Unfortunately, Riksbanken's (Sweden's equivalent to the Fed) expectations were not fulfilled by the consumer price index with a fixed interest rate (CPIF), which is the value they attach the most importance to. In Riksbanken's latest report, there was an expectation of 7.8% for March, while the real outcome was 8%.

This most likely means that Riksbanken will raise the policy rate by 50 basis points at the next monetary policy announcement on 26 April 2023.

Even though we have hopefully passed the inflation peak, Sweden's borrowers most likely still have at least one interest rate increase left before the policy rate levels off and stabilizes.

How many borrowers can handle this (these?) upcoming interest rate hikes remains to be seen.