Key Takeaways
- The Riksbank kept its policy rate unchanged at its third meeting of 2026.
- The central bank flagged that the risk that the war in the Middle East will lead to higher inflation has increased somewhat.
- Markets have sharply scaled back expectations for near-term rate hikes following weaker domestic inflation data.
Sweden’s Riksbank left its policy rate unchanged at 1.75% at its third meeting of 2026, following three rate cuts in 2025. The Executive Board was unanimous in its decision as the war in the Middle East continues to cloud the global economic outlook, with the Riksbank warning that a prolonged conflict could fuel inflation and weigh on growth.
Oil prices remain elevated and volatile as the conflict evolves, while other commodity prices have also been affected, adding to cost pressures across parts of the business sector.
“It is primarily higher fuel prices that have been the most tangible economic effect of the war so far,” the Riksbank says, although financial markets still expect oil prices to ease later this year.
War-Driven Inflation Risks Clash With Weak Domestic Growth
While the war in the Middle East has heightened concerns about global inflation, the Riksbank noted that Sweden’s economy has shown signs of weaker-than-expected growth at the start of the year, while recent inflation readings have come in below the central bank’s forecasts, both including and excluding energy prices.
The central bank stressed, however, that uncertainty remains high. If the conflict were to trigger broader and more persistent inflationary pressures globally, the Riksbank said it “would need to raise the policy rate.” Still, with domestic inflation pressures currently subdued and economic activity weaker than expected, policymakers said they are closely monitoring developments before making further moves.
Analysts say much will depend on whether disruptions to global energy markets prove temporary. “Much hinges on how long the Strait of Hormuz remains closed. Our best guess is that the Strait will open before inflation impulses threaten the 2% target,” says Torbjorn Isaksson, chief analyst at Nordea.
Will the Riksbank Hike Interest Rates in 2026?
Markets have swung sharply in recent weeks as investors reassess the inflation and rate outlook against a backdrop of geopolitical uncertainty and weakening economic data. Prior to the April inflation release, markets had increasingly priced in the risk that higher energy costs linked to tensions in the Middle East could reignite inflation pressures globally. At one point, traders were pricing in around 35 basis points of tightening from the Riksbank by year-end, with the first hike largely expected in August or September.
That view shifted materially after April inflation came in weaker than expected and optimism around renewed US-Iran negotiations helped ease concerns over further oil price spikes. Markets subsequently pared back expectations for near-term tightening, with investors now pricing in no change from the Riksbank in June and a full 25 basis point hike only towards the end of the year.
On the other hand, Handelsbanken maintains its forecast for unchanged rates through 2026, while indicating that risks remain elevated and a failed peace deal could reignite oil prices and spill over into broader commodity markets and the wider economy. Nordea also believes the Riksbank will leave rates unchanged for the remainder of the year.
When Are the Riksbank’s Remaining Rate Decisions in 2026?
Here are the key interest rate decision dates for Sweden’s Riksbank in 2026:
- June 17
- Aug. 20
- Sept. 24
- Nov. 4
- Dec. 16
