Sweden: Riksbank leaves rates unchanged in November
The Riksbank stands pat as expected: At its meeting on 4 November, the Riksbank decided to leave the policy rate unchanged at 1.75%. The hold followed a total of 225 basis points in cuts since May 2024, and aligned with market expectations.
Hold to support disinflation and economic growth: The key domestic factors influencing the Central Bank’s decision on interest rates were primarily inflation, which, although still above the 2.0% target, has begun to fall back down, and economic activity, which is showing signs of recovery. This includes stronger-than-expected GDP growth in the third quarter and initial signs of improvement in the labor market. Moreover, risks to the inflation and economic activity outlooks remain elevated due to expansionary fiscal policy at home and still-elevated global trade tensions.
Rates to remain stable ahead: The Central Bank has provided forward guidance that the policy rate is expected to remain at its current level of 1.75% for some time, reflecting a cautious approach aimed at supporting a gradual strengthening of economic activity and guiding inflation toward its 2.0% target in the medium term. All but one of our panelists see rates on hold at the last meeting of 2025 on 18 December. Looking further ahead, most panelists expect the Bank to stand pat in 2026, but a minority have penciled in a rate hike.