(Bloomberg) -- Expectations for Sweden’s long-term inflation rate rose somewhat in a survey published after the central bank reduced its benchmark rate and opened the door to larger cuts in the months ahead.
The poll, commissioned by the Riksbank, showed that money market players see annual price increases with a fixed interest rate at 2.1% in five years, up from 2% in the previous month. Respondents still expect the inflation rate to be below target in one year as well as in two years.
The reading should give the central bank confidence that long-term expectations remain well-anchored despite inflation falling some way below 2%. A flash report on September price increases that will be published on Tuesday is expected to show CPIF at 1.1%, down from 1.2% in the previous month.
The sharp slowdown of price increases has prompted the Riksbank cut its benchmark rate to 3.25% from a peak of 4%, and it has outlined further easing in the months ahead.
The Prospera survey, published Monday, also showed:
- CPIF is seen at 1.7% in year 1, unchanged from September.
- CPIF is seen at 1.8% in year 2, also the same as in the previous month.
- Interviewees now see the Riksbank’s policy rate at 2.7% in 3 months, down from 3% in September.
- In 12 months, they expect the policy rate to be at 2%, and in 60 months at 2.3%.
--With assistance from Joel Rinneby.
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