Sweden's Riksbank holds policy rate at 1.75% and flags higher odds of a 2026 hike

Sveriges Riksbank left its policy rate unchanged at 1.75% on Wednesday and nudged its forecast path higher, signalling that the probability of a rate rise later in 2026 had risen. The decision, taken at the Executive Board's meeting on 16 June and announced on 17 June, keeps the rate in force from 24 June.

In its monetary policy report, the Riksbank lifted the projected policy rate for the fourth quarter of 2026 to 1.82%, from 1.77% in the March round. The Executive Board said it had raised the policy-rate forecast somewhat and that the probability of the rate being raised later this year had increased compared with the assessment in March.

PATH REVISED UP, NOT DOWN

In March, the Riksbank had forecast the policy rate averaging 1.75% in the third quarter and 1.77% in the fourth quarter of 2026. By June, the Executive Board judged that supply disruptions linked to the war in the Middle East had raised inflationary pressures enough to warrant a marginally tighter path, even without moving the rate at this meeting.

The board said it was well-balanced to leave the rate unchanged, given low underlying inflation and somewhat weaker-than-normal economic activity.

The Riksbank said inflation in Sweden is still low, largely due to the dampening effects of fiscal policy measures, and that growth was lower than expected in the first quarter.

GUIDANCE POINTS TO LATER IN 2026

The Riksbank's guidance referred to an increased probability of a rate rise later this year. It said there is considerable uncertainty and that developments call for vigilance.

The Riksbank said the range of potential outcomes was wide and that it was highly prepared to adjust monetary policy. The new forecast has the policy rate rising gradually to an average of 1.93% in the second quarter of 2027 and 2.07% in the second quarter of 2028.

The June monetary policy report and press release are published on the Riksbank's website, alongside the updated rate path and macroeconomic projections. The minutes of the monetary policy meeting were due to be published on 24 June 2026.