After the past weekend's centralised wage agreement in trade sectors we are halfway through the private sector negotiations.
From a monetary policy perspective, the market-based negotiations in the private sector are undoubtedly more interesting than the public sector's.
With agreements at less than 2.2% y/y, wage drift will need to reach in excess of 2% to push inflation in line with the Riksbank inflation target. Wage drift of 2% was last seen, briefly, in 2001.
To the best of our knowledge, the Riksbank was expecting an agreement of the same (or higher) magnitude as last time (c.2.5% y/y).
The Riksbank should now be on full alert and the agreements' short duration means it must soon again do what it can to anchor the wage formation process at the inflation target (2%).
Riksbank is set to extend stimuli throughout 2016.
For a more thorough run-through of Swedish wage formation, confer our report Waging War .
To read the entire report Please click on the pdf File Below