Will Sweden's central bank cut interest rates next week?
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At the time of the June meeting, most economists expected the bank to announce a further quarter-point cut in August, reducing the reference interest rate to 1.75 percent.
Since then, however, inflation has crept up worryingly, hitting 2.9 percent in June and 3 percent in July. This has left economists doubtful over whether the bank will risk another cut this month, given that inflation remains stubbornly above the 2 percent it is supposed to track under its mandate.
"The big picture is that inflation is way over the Riksbank's target," Susanne Spector, chief economist at Danske Bank, told the TT newswire, saying she had been surprised by the 1.1 percent month-on-month increase in food prices revealed in a report from Statistics Sweden on Friday.
The 3 percent rise in prices was slightly below the consensus rise of 3.1 percent, put together by the Bloomberg news agency. It was also arguably seasonal - driven by high sales of ice cream and soft drinks as a result of the hot weather.
But Spector said that the higher-than-targeted inflation figures would nonetheless make the Riksbank more cautious.
"The Riksbank is in a difficult situation with weaker economic development, but where inflation has been above 3 percent for two months in a row," she said.
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She was unusual among bank economists in predicting not only that there would be no rate cut on August 19th, but also that there would be no further cuts this year.
Alexandra Stråberg, economist for the Länsförsäkringar bank, agreed that there was now little chance of the Riksbank cutting interest rates at the August meeting.
"The summer's inflation figures have been something of a cold shower for both the Riksbank and Swedish households. This was the last thing the economy needed in the current situation," she said.
She said that a degree of extra summer inflation was to be expected, however.
"It's really not that unusual, but the most important thing about this outcome is the direction," she said. "You want to see a downward trend to feel confident about lowering the interest rate and we have no clear trend, but inflation seems to have stalled around 3 percent."
SEB's chief economist, Jens Magnusson, took comfort with the fact that inflation was slightly below the consensus forecast.
"This means we can assume that the Riksbank will lower the key interest rate in September. If the figure had landed higher today, that would have been more unlikely."
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