Riksbank stands pat once again in June

Sixth straight hold had been penciled in by markets: On 17 June, the Riksbank left its policy rate unchanged at 1.75% for its sixth consecutive meeting, in line with market expectations. The extended pause followed a cumulative 225 basis points of cuts delivered since May 2024 and September 2025.

Hold driven by low inflation and muted economic activity: In making its decision, the Riksbank highlighted growing risks to inflation stemming from the conflict in the Middle East. Nevertheless, a hike was not warranted as the Bank noted that inflation remained below its 2.0% target through May. Moreover, the Bank also signaled recently weaker-than-expected economic activity as a further reason for leaving rates on hold until a clearer picture emerges of the war's effects on the Swedish economy.

Panel split over year-end outlook: The Bank signaled that hikes could become necessary should a protracted Middle East conflict drive a persistent upturn in inflation. Our Consensus sees rates ending 2026 above current levels, with roughly half of panelists expecting the Riksbank to stand pat and the other half penciling in a 25–50 basis point hike. Middle East tensions remain a two-sided risk: A larger hit to growth would argue for more easing, while higher inflation would call for further tightening.

Panelist insight: According to Goldman Sachs’ Katya Vashkinskaya: “Given the recent guidance, subdued activity data and weaker domestic price pressure now but clear upside inflation risk later, we continue to expect the Riksbank to stay on hold in June and start raising the policy rate later this year to 2.25% in 2027. We, however, do not expect the hikes to start before December as the Executive Board will need to see evidence of the energy shock starting to generate broader and more persistent inflationary pressures before warranting earlier tightening. We expect the Executive Board to signal readiness to tighten monetary policy and upgrade the policy rate path to indicate a more meaningful probability of a hike by year-end.”

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