Key Takeaways
- Sweden’s Riksbank is expected to keep its policy rate unchanged at 1.75% on June 17.
- Analysts expect the central bank to adopt a more hawkish tone and raise its projected rate path.
- A weaker krona and further rate hikes from the ECB could increase pressure on the Riksbank to tighten policy.
Sweden’s Riksbank is expected to keep its policy rate unchanged at 1.75% when it announces its decision on June 17. While the rate decision itself is unlikely to surprise markets, investors will closely watch the accompanying Monetary Policy Report for clues about how policymakers balance weak domestic inflation and growth against rising external inflation risks.
“The probability for a rate hike from the Riksbank has risen. That is not due to May inflation, but rather that the Strait of Hormuz is still blocked,” says Torbjorn Isaksson, chief analyst at Nordea.
Geopolitical Risks Keep the Riksbank on Alert
While inflation remains below both the Riksbank’s target and its forecasts, policymakers are increasingly focused on whether higher energy costs and supply-chain disruptions could eventually feed through to consumer prices.
“Despite significantly lower inflation, weaker labour market indicators and softer GDP growth, we expect the Strait of Hormuz crisis and the associated upside risks to inflation to dominate the June Monetary Policy Report,” say Olle Holmgren, chief strategist, and Amanda Sundstrom, FX and fixed income strategist at SEB.
“Inflation well below both the inflation target and the Riksbank’s March forecast, combined with weaker-than-expected labour market and growth data, would under normal circumstances imply that a rate cut could be considered,” they add.
Instead, analysts believe the Riksbank remains wary of a repeat of the inflation surge that followed Russia’s invasion of Ukraine in 2022.
“The prospects for an agreement before the end of June look worse than they did at the Riksbank’s May meeting, and the longer the deadlock persists, the further cost pressures spread through the value chains, all the way downstream to consumer prices,” says Claes Mahlén, chief strategist at Handelsbanken.
At the same time, Handelsbanken notes that markets have so far remained relatively calm. “The impact on oil prices of the reduced likelihood of peace has been limited,” Mahlén says, adding that “the correlation between the probability of peace on the Polymarkets prediction market and oil prices has weakened.”
When Are the Next Interest Rate Decisions for Sweden’s Riksbank?
The upcoming rate decisions will be announced on the following dates:
- June 17
- Aug. 20
- Sep. 24
- Nov. 4
- Dec. 16
Will the Riksbank Raise Interest Rates in 2026?
Both SEB and Handelsbanken expect the Riksbank to raise its inflation forecast and its policy rate path at the upcoming meeting while likely signalling that rates may need to be raised.
However, neither SEB nor Handelsbanken expects a rate hike this year. Handelsbanken’s base case is for the policy rate to remain unchanged throughout 2026 before a full rate hike in May 2027. SEB is even more dovish, forecasting the first rate hike only at the end of 2027.
“In our view, both inflation dynamics and resource utilisation still differ from most other economies. Despite a somewhat higher rate path, we therefore maintain our view that the first rate hike will not come until late next year,” say SEB’s Holmgren and Sundstrom.
The ECB’s decision to raise its key interest rate by 25 basis points on June 11 is also likely to feature prominently in the Riksbank’s assessment as economists note that there is a limit to how much the Riksbank can diverge from other major central banks.
A Weaker Krona Could Lead to Higher Rates
Nordea also highlights the krona as one of the key risks to its forecast that rates remain unchanged this year.
According to Isaksson, additional rate hikes from the ECB could widen the interest-rate differential with Sweden and put downward pressure on the krona, adding to inflation through higher import prices.
“The primary driver of the increased likelihood of an interest rate hike is that the ECB is tightening monetary policy, which could weaken the krona,” he says.
Even so, Nordea maintains its forecast that the Riksbank will keep the policy rate unchanged at 1.75% throughout 2026, noting that inflation remains low, inflation expectations are stable and the krona has not yet become a concern.
