The SNB confirmed this week that it wouldn’t be following the ECB in raising its inflation target, but that doesn’t change the big picture that it looks set to leave interest rates on hold for a very long time. Meanwhile inflation in Sweden bucked the recent trend in the US and UK by falling below target in June, and we think the Riksbank will also leave rates on hold for longer than investors anticipate. If the Riksbank ends up tightening sooner than expected, it would be due to concerns about rising house prices rather than consumer prices.
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