Key Takeaways
- The Riksbank kept its policy rate unchanged at its June meeting, but raised its projected interest rate path due to rising external inflation risks.
- Analysts still expect the Riksbank to leave interest rates unchanged through the remainder of 2026 despite the higher rate forecast.
- Inflation in Sweden remains low and economic activity is weaker than normal, but the central bank expects the economy to strengthen in the coming years.
Sweden’s Riksbank left its policy rate unchanged at 1.75% at its fourth meeting of 2026, citing a balance between subdued domestic inflation and rising external inflation risks linked to the conflict in the Middle East.
“The probability that the rate will be raised later this year has increased in relation to the assessment in March,” the Riksbank says.
Sweden’s Domestic Economy Remains Weak but Recovery Continues
While inflationary pressures have increased due to supply disruptions linked to the war in the Middle East, inflation in Sweden remains low and economic activity is weaker than normal.
Inflation rose to 1.5% in May from 0.8% in April, a stronger-than-expected outcome that nevertheless leaves inflation below the Riksbank’s target.
“Moreover, the recovery in the labor market is tentative. However, household consumption has continued to increase at a solid pace, while purchasing power has strengthened,” the Riksbank says.
The central bank expects economic activity to strengthen over the coming years, but revised its 2026 GDP forecast down to 2.2% from 2.5% in March.
Inflation forecasts were also adjusted. CPIF, the Riksbank’s preferred measure of inflation, is expected to average 1.1% in 2026, down from the 1.5% forecast in March, before gradually returning to the 2% target.
Analysts say much will depend on whether disruptions to global energy markets prove temporary. “Uncertainty remains substantial, but the probability of a lower oil price scenario has shifted materially higher over recent days,” says Magnus Lindskog, senior economist at Handelsbanken.
When Are the Riksbank’s Remaining Rate Decisions in 2026?
Here are the key interest rate decision dates for Sweden’s Riksbank in 2026:
- Aug. 20
- Sept. 24
- Nov. 4
- Dec. 16
Will the Riksbank Hike Interest Rates in 2026?
Although the policy rate remained unchanged, the Riksbank’s updated rate path suggests policymakers have become more concerned about inflation risks.
“The rate path indicates a policy rate at 1.87% in December. Thus, the rate path has a 50% probability for a 25bp rate hike year-end,” says Torbjorn Isaksson, chief analyst at Nordea.
However, he argues that the revised path should not be interpreted as a strong signal of an imminent move.
“This shows that a rate hike is possible during the second half of this year, while it is no strong signal of a rate hike in August or September,” he says.
Handelsbanken’s Magnus Lindskog says that while the higher rate path makes sense given recent energy-driven inflation pressures, it likely overstates the probability of a hike in the second half of the year.
“On balance, we read the upward revision to the rate path as understandable despite the shift lower in oil prices,” Lindskog says.
Handelsbanken notes that the US-Iran peace deal and an imminent reopening of the Strait of Hormuz could ease pressure on global energy markets.
The bank notes that the Riksbank’s forecasts were based on information available on June 11 and therefore may not fully reflect the latest geopolitical developments.
Despite the Riksbank’s comments on likely rate increases, both Nordea and Handelsbanken continue to forecast an unchanged policy rate through the remainder of 2026. Handelsbanken expects the first rate hike to come in March 2027.
