Damned if you do, damned if you don't

Sweden's inflation figure for March 2024 is lower than many, including Sweden's central bank, expected. The expected 2.7% became 2.2% according to CPIF.

Sweden's central bank AKA Riksbanken has previously announced that they intend to lower the policy rate either in May or June. There is, however, one factor that causes Riksbanken a great deal of concern, the exchange rate of the Swedish krona.

When the inflation figure was published, the Swedish krona further lost value against the US dollar. When the inflation outcome is this low, you might have to accept a slightly weaker Swedish krona.

If we have high inflation, it can be difficult with a weak krona, because then import prices will be higher. If we have low inflation, it is difficult with a strong krona, because then inflation can be too low.