EUR/SEK gains slightly ahead of ECB policy decision

The EUR/SEK currency pair edged higher on Thursday, after Swedish CPI data and as focus sets on the outcome of the European Central Bank’s policy meeting later today.

The European Central Bank is largely expected to lower its main refinancing operations rate by 25 basis points to 4% at its September policy meeting, while its deposit facility rate is expected to be reduced to 3.50% from 3.75% currently.

In July, the ECB left key rates intact, as most inflation indicators have stabilized or decreased.

The ECB noted that the inflationary impact of high wage growth had been mitigated by profits.

Still, domestic price pressures and services inflation have remained elevated, while headline inflation is expected to stay above the ECB’s target into 2025.

Market players will be closely watching ECB President Christine Lagarde’s press conference for any hints regarding future interest rate trajectory.

Meanwhile, on the macro data front, Sweden’s annual consumer inflation has eased to 1.9% in August from 2.6% in July. It has been the lowest inflation rate since July 2021, mostly due to a broad slowdown in cost of housing and utilities.

Sweden’s consumer price index with a fixed interest rate (CPIF), went up 1.2% year-on-year in August, while easing from 1.7% YoY in July.

As of 8:52 GMT on Thursday the EUR/SEK currency pair was inching up 0.08% to trade at 11.4357.