Sweden Interest Rate

Riksbank stands pat for seventh straight meeting in August

Hold had been penciled in by markets: At its 20 August meeting, the Riksbank left its policy rate unchanged at 1.75% for a seventh consecutive meeting, in line with market expectations. The extended pause followed 225 basis points of cuts from May 2024 to September 2025.

Higher summer inflation keeps hike risk alive: The Riksbank noted that inflation and growth have been stronger than expected over the summer, making a cut inappropriate, while the overall economic picture does not yet justify a hike. Underlying inflation is still around 2%, the labor market remains weak and there are signs that supply pressures are easing. Holding rates steady therefore struck a balance between the risk of inflation rising further and the risk of cooling the economy too quickly.

Panel split between rates on hold and further hikes: The Bank reiterated that the probability of a rate hike later this year remained. Our panel is broadly split between those who expect the Bank to hike by end-2026 and those who expect it to stand pat; much will hinge on the speed with which the Hormuz Strait crisis is resolved.

Panelist insight: Swedbank’s Jesper Hansson and Glenn Nielsen commented: “A rate hike already at the next meeting in September is still some way off in our view. Although underlying inflation (CPIF excluding energy and temporary fiscal measures) has been higher than the Riksbank’s forecast, it is still below 2%, while the unemployment rate has been slightly higher than forecasted.”

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