Despite consensus already anticipating CPIF inflation would slow sharply from 6.4% to 4.9%, the August print came in at 4.7%. The core rate (CPIF excluding energy), which is closely watched by the Riksbank, was 7.2%, down from 8.0% in July.

There is a higher risk that if the Riksbank hikes, some doves may voice their dissent as they did back in April. On that occasion, the implications for SEK were disastrous. With SEK trading at historical lows, we are more inclined to think Riksbank members will show a united front and preserve currency stability. That would require not just a hike, but also signalling another one in rate projections. We are slightly less convinced the Riksbank can convey this hawkish message next week after these inflation figures, but it remains our base case.

If the ECB hikes today, risk sentiment remains unfavourable and the Fed is hawkish next week, EUR/SEK may well be hitting 12.00 before the Riksbank meeting: another incentive to be hawkish for Swedish policymakers.