Riksbank sticks to holding pattern
Sweden’s central bank kept borrowing costs unchanged for a fourth consecutive month, reaffirming its plan to leave interest rates on hold until at least next year. The Riksbank maintained its key policy rate at 1.75%, a three-year low, in line with expectations from all economists surveyed.
Officials said the current rate level is helping to support economic activity while keeping inflation close to target over the longer term.
Economic recovery gains momentum
The decision comes as Sweden’s economy shows clear signs of a rebound following nearly three years of stagnation. Growth is expected to reach around 2.4% in 2026, placing Sweden among the fastest-growing economies in Europe. At the same time, inflation has eased significantly toward the 2% target and is expected to dip below it in the near term.
These conditions allow policymakers to maintain a wait-and-see approach without rushing into further easing or tightening.
Rate cuts remain unlikely this year
Riksbank officials indicated that as long as the recovery continues and unemployment declines, additional rate cuts during the year are unlikely. Market participants also see limited chances of rate hikes in the near term, even if growth surprises on the upside, given the early stage of the recovery.
According to the central bank’s latest projections, the next phase of rate increases is expected to begin in 2027, once inflationary pressures start to rebuild.
Geopolitical risks cloud outlook
The Riksbank highlighted rising uncertainty linked to global geopolitical developments, particularly those stemming from the United States. While Sweden’s economy has so far remained resilient to higher tariffs and external shocks, officials warned that confidence among households and businesses could deteriorate quickly.
This uncertainty remains a key factor shaping the central bank’s cautious policy stance.
Expert conclusion
As International Investment experts report, Sweden’s rate decision underscores a deliberate strategy to protect a fragile recovery while guarding against medium-term inflation risks. By maintaining a prolonged pause, the Riksbank is signaling confidence in domestic fundamentals while acknowledging that global uncertainty could still alter the policy path.