Key Takeaways
- Sweden’s Riksbank is expected to leave its policy rate unchanged at 1.75% at its Sept. 24 meeting.
- August inflation came in lower than expected, which SEB says effectively rules out a hike in September and makes a hike in November considerably less likely.
- Banks are divided on the timing of the next hike: Nordea and Swedbank expect one in November, Handelsbanken in December, while SEB doesn’t expect a hike until March 2027 at the earliest.
Sweden’s Riksbank is expected to keep its policy rate unchanged at 1.75% at its upcoming decision on Sept. 24. The August meeting left both the rate and the message unchanged and signaled that risks to the rate path from the June report were broadly unchanged, according to SEB.
August Inflation Came in Lower Than Expected
Core CPIF, which excludes energy, came in at 0.52% year-on-year in August, according to SEB, down from 0.6% in July. Core goods prices fell more than expected and account for most of the deviation from SEB’s forecast, while services inflation also came in lower than expected. According to SEB, the outcome effectively closes the door on a September hike, and likely a November hike too, since only one more inflation print will be published before that meeting.
“The labor market is still weak, and we think the Riksbank wants to see clearer improvement before the next rate hike,” said Amanda Sundström, Senior Macro Strategist Sweden at SEB. The “inflation figure is also a welcome sign that this summer’s stronger price increases may be starting to fade.”
Prices for recreation, sport and culture, which include foreign travel, fell in August after several months of unusually large increases, SEB says.
According to Handelsbanken, August inflation sent mixed signals: Core goods prices within clothing and footwear were strong, but other core goods were weak. So-called “super-core” inflation (services excluding rents, fees and foreign travel) weakened in August after strong readings before. Handelsbanken judges this year’s rising trend to still be intact but wants to see the September numbers to confirm it. The bank’s economists also write that the Riksbank may need to revise its inflation forecast higher as soon as the September meeting.
Headline CPIF came in at 0.7% year-on-year in August, unchanged from July, according to Handelsbanken.
Market Expectations for a September Rate Hike Have Fallen Sharply
“The market has sharply scaled back expectations of a near-term rate hike. Ahead of the inflation report, market pricing indicated roughly a 30% probability of a hike in September. It’s now around 10%,” said Olle Holmgren, Chief Strategist Sweden at SEB.
Strong GDP Growth, but the Labor Market Remains Weak
GDP rose 1.6% quarter-on-quarter and 3.3% year-on-year in the second quarter, according to SEB, 0.8 percentage points above the Riksbank’s June assessment. The National Institute of Economic Research’s sentiment indicator rose to 105 in August, the highest level since 2022 and above its historical average, according to SEB.
The labor market, meanwhile, has continued to develop more weakly than the Riksbank’s forecast, according to SEB, which writes that both employment and unemployment have been worse than the Riksbank expected in June.
Will the Riksbank Raise Rates Later This Year?
Nordea’s Torbjörn Isaksson, chief analyst at Nordea, expects a hike as soon as November to 2.00%, followed by another hike to 2.25% in February 2027. According to Nordea, the revised forecast reflects, among other things, a hawkish global rate environment, with several central banks having hiked or signaled they intend to, which has put downward pressure on the krona. Nordea also writes that the Swedish economy is performing strongly. Swedbank, in a report published on Aug. 28, before August’s inflation print came in lower than expected similarly expected a hike to 2.00% in November and then to 2.25% in February 2027. Swedbank’s own August inflation estimate in that report came in higher than the actual print, so the forecast should be read against the information available at the time.
Handelsbanken expects a rate hike to 2.0% in December, followed by another hike to 2.25% in June 2027.
SEB expects more dovish policy decisions and sees the Riksbank leaving rates unchanged for the rest of the year, with the next hike not until March next year, followed by a second hike in September 2027. SEB writes that it still expects the Riksbank to signal, at the September meeting, a rate path pointing to a 60% probability of a hike over the coming three policy meetings.
What Do Investors Expect?
According to SEB’s investor survey, conducted among large Swedish fixed income investors on Sept. 14–17, a wide majority expect the Riksbank to keep the policy rate at 1.75% in September, while 12% predict a hike to 2.00%. Further out, views diverge: for the November meeting, 42% expect the rate to still be at 1.75%, 54% expect 2.00%, and 4% expect 2.25%.
For December 2026, 96% of investors expect at least one hike, and 80% expect exactly one hike to 2.00%. According to SEB, expectations for December have shifted markedly higher since the August survey. For December 2027, expectations span 1.50% to 2.75%, with a median forecast of 2.25%—unchanged from August.
The median investor expectation is higher than the Riksbank’s own June rate path, which implies a level of 1.87% by December. According to SEB, investors instead expect, at the median, a rate of 2.00% by December 2026 and 2.23% by December 2027.
The Krona and the ECB Are Putting Pressure on the Riksbank
The European Central Bank raised its policy rate to 2.50% on September 10. SEB writes that it has revised its ECB forecast and now expects further hikes to 3.00% in December 2026 and March 2027, as a pre-emptive move against rising energy prices. According to SEB, the Swedish krona has weakened noticeably since August, while hawkish signals from the ECB and other central banks are putting pressure on the Riksbank.
Sweden’s Election Is Expected to Have Limited Market Impact
The preliminary election result pointed to a very fragmented parliamentary situation, with the red-green opposition holding 176 of parliament’s 349 seats and the Tidö coalition holding 173, according to SEB. The last votes were counted on Wednesday, Sept. 16, but the final official election result wasn’t expected until around Sept. 20. SEB assessed that the remaining votes from Swedes abroad would likely shift the seat distribution slightly in the Tidö coalition’s favor, to 175 versus 174 seats, though the opposition was still expected to retain its very narrow majority. According to SEB, market reactions have so far been limited, and Sweden’s public finances are described as strong, with low government debt and a robust institutional framework.
When Are the Next Interest Rate Decisions for Sweden’s Riksbank?
- Sept. 24
- Nov. 4
- Dec. 16
- Feb. 3, 2027
- March 24, 2027
