Riksbank shifts up gears but rate “summit” is in sight

While the Riksbank stepped up the pace of tightening this week, the fact that Swedish households are highly sensitive to rate hikes, and the likelihood that weakening activity will soon reduce the ability of firms to continue to push up prices, argues for a comparatively short tightening cycle, with interest rates peaking at a lower level than in many advanced economies (2%). Next week, the release of June consumer price inflation data from Switzerland on Monday is likely to show that the headline rate rose above the 3% mark for the first time since 2008.