Sweden's Riksbank Holds Policy Rate at 1.75% in May 2026 as Risk of Higher Inflation Increases

Sweden's Riksbank has held its policy rate at 1.75%, keeping monetary policy on hold at the May 2026 meeting of its Executive Board. The decision was taken on 6 May 2026 and takes effect from 13 May, according to the Riksbank's decision document, published with the announcement on 7 May.

The Executive Board said inflation was low but said the risk of higher inflation had increased somewhat. Sweden's growth was weak at the start of the year, with the Riksbank pointing to favourable conditions for stronger activity ahead.

RISK OF HIGHER INFLATION

The Riksbank said the war in the Middle East was continuing to affect developments around the world, and that the longer it continues, the greater the risk of inflation rising and of negative effects on economic developments. If the war were assessed to have large effects on the global economy and lead to a broad and persistent upturn in inflation, the Riksbank would need to raise the policy rate, it said.

The Riksbank said the current level of the policy rate gives it a good initial position to adjust monetary policy if required to safeguard the inflation target. The Monetary Policy Update published with the decision sets out the Executive Board's assessment; it contains no new forecasts, which are next due in the Monetary Policy Report on 17 June 2026.

The Riksbank said there is considerable uncertainty, that developments call for vigilance and that it is monitoring developments closely.

GROWTH OUTLOOK

The Riksbank said there had been signs that growth was weaker than expected at the start of the year. It said there are fundamentally favourable conditions for stronger economic activity going forward, although the war is dampening the outlook somewhat in the near term.

The Riksbank said that inflation currently below target, together with the weak economic activity at the outset, means there is scope to wait until there is a clearer picture of the effects of the war and the supply shocks it entails.

The policy rate at 1.75% takes effect from 13 May 2026. The next monetary policy meeting will be held on 16 June 2026, with the decision announced on 17 June.