Sweden: Riksbank holds in December, as widely expected
The Riksbank stands pat at final 2025 meeting: At its 18 December meeting, the Riksbank opted to leave the policy rate unchanged at 1.75%, where it has stood since September 2025. The policy rate subsequently remained at an over three-year low, following total reductions of 225 basis points since May 2024. The hold was in line with market expectations.
Improving inflation and growth outlook drives hold: The Riksbank cited near-target inflation and stronger economic activity to justify the hold. Although volatile, inflation remains near the Bank’s 2.0% target, reducing the need for a rate hike. Similarly, a cut was off the table as the economy has shown promising signs of recovery—although full normalization will likely take time—and forecasts for economic activity have strengthened from September. Finally, economic and geopolitical risks continue to loom, reinforcing the decision to play it safe and hold rates steady.
The Riksbank likely to keep rates stable ahead: The Central Bank reiterated that the policy rate will likely remain at its current level of 1.75% until 2027, reflecting a cautious approach aimed at supporting the gradual strengthening of economic activity and guiding inflation toward its 2.0% target in the medium term. In line with the Central Bank’s guidance, most of our panelists expect the Bank to stand pat through year-end, though some expect a quarter-point hike.