It seems to be going according to plan

Swedish inflation rose compared to the previous month from 1.3% to 1.7% and is still below Sweden's central bank AKA Riksbanken's inflation target of 2% per year measured by CPIF. It was the second month in a row that inflation ended up below Riksbanken's inflation target. This information writes in stone that Riksbanken will make the second reduction of this year's policy rate next week.

One reaction to the fact that inflation for July was lower than the target is that more actors are now requesting a double reduction, i.e 50 points, from Riksbanken on 20 August. One reason for the demand for a double reduction is that Sweden's unemployment and bankruptcies are steadily increasing due to the austerity that occurred because of Riksbanken's previous policy rate increases. Even if Riksbanken's measures take place in real time, it takes time before they are noticed by society and Sweden is drawn deeper into its current recession.

Despite this, I do not think that Riksbanken will let off the brakes, but will continue with reductions of 25 points at a time. At the presentation of the rate of inflation for last month, a Swedish member of parliament thought that as inflation falls, prices would also fall, but it doesn't work that way. The fact that inflation falls and not prices is due to comparing this year's July prices with the prices for July 2023.

America's inflation rate for July was also reported yesterday. Inflation rate falls to 2.9% in July, adding to signs that rising prices have slowed. Consumer price growth in July slowed to its lowest level since the pandemic, a sign that the rising inflation that has gripped the US economy is finally ebbing.

Dow Jones had already priced in the numbers and the market's reaction was moderate.