Riksbank holds rate at 1.75% but signals hikes could start this year
The Swedish central bank left its policy rate unchanged and said increases are likely to begin in 2026 if the economic outlook holds.
Published
Sweden's central bank kept its policy rate at 1.75% on Thursday, the level it has held since a cut in September 2025, and said that if the outlook for inflation and economic activity stays as expected, increases to the rate will begin this year.
The decision, which takes effect from September 30, follows a run of very weak price data. Swedish headline inflation stood at 0.3% in August and core inflation at 0.7%, figures Commerzbank analyst Antje Praefcke described as very low price pressure, according to FXStreet. Danske Bank's research team told FXStreet it expects the Riksbank to signal a hike toward year-end, with the rate path eventually leveling out near 2.25%, the midpoint of its 1.5% to 3.0% neutral range.
The guidance repeats a message the Riksbank gave at its previous meeting on August 20, when it said the chance of a rate increase later in the year remained, contingent on summer inflation proving persistent. Before Thursday's meeting, Praefcke said the decision was likely to be broadly neutral for the krona.
The conditional guidance lines up with improving domestic demand and manufacturing momentum in Sweden, but the bank's stress on an unchanged outlook points away from any imminent move from the current 1.75% rate. Inflation concerns persist among officials even as headline price growth sits well below target, and uncertainty around Sweden's coming election could delay any clearer signal. Investors should expect the Riksbank to keep communicating in measured steps rather than moving toward hikes on an aggressive timetable.