FED: Williams - Longer Than Expected Lag To Inflation Expectations

Swedish January flash inflation is due tomorrow at 0700GMT/0800CET. The Riksbank projected CPIF ex-energy at 2.4% Y/Y in the December MPR, but this is likely to be mechanically too high, given December inflation surprised two tenths to the downside at 2.0% Y/Y. As such, Bloomberg consensus sees CPIF ex-energy at 2.1% Y/Y.

• Consumption data for 2023 will once again be used to calculate 2025 basket weights (as in 2024), so analysts do not expect a large basket effect in January.
• Analysts generally expect start of year price resets in services (excluding rent) to be smaller than in 2024, while goods components are likely to see seasonal falls in prices.
• The Riksbank’s January meeting minutes continued to signal broad-based confidence in the inflation outlook. Deputy Governor Jansson and Governor Thedeen highlighted recent increases in producer prices as a risk to monitor, but that these developments do not yet change the assessment of monetary policy.
• As a result, we currently consider activity/labour market data and any US tariff developments to be a more important to the near-term Riksbank policy outlook.
• No details will be available in the flash release, with final CPI not due until Feb 18th. See below for a selection of analyst comments: 

• EUR/USD: $1.0250(E1.5bln), $1.0300(E1.0bln), $1.0315-25(E2.2bln), $1.0350-55(E1.1bln), $1.0370-80(E1.5bln), $1.0390-10(E2.8bln), $1.0430-50(E2.4bln), $1.0500(E1.2bln)
• USD/JPY: Y152.50($720mln), Y153.90($1.4bln)
• EUR/JPY: Y159.30(E878mln)
• GBP/USD: $1.2455(Gbp1.4bln), $1.2550(Gbp1.1bln)
• EUR/GBP: Gbp0.8465(E1.1bln)
• USD/CAD: C$1.4200($1.8bln)
• USD/CNY: Cny7.3000($524mln), Cny7.3550($648mln)

The DMO has announced it will be looking to sell GBP1bln of the 0.625% Mar-45 linker (ISIN: GB00BMF9LH90) at its auction next Wednesday, February 12.