MNI Riksbank Review: December 2025 - Holding Steady

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EXECUTIVE SUMMARY

• The Riksbank held the policy rate at 1.75% as unanimously expected. The statement re-iterated that the policy rate is likely to remain at this level for “some time to come”. This was supported by the December MPR rate path, which was steady at 1.75% for the first three quarters through Q3 2026. A reminder that the first three quarters of the path are “owned” by the Executive Board, and therefore constitute a policy signal.
• The Riksbank acknowledged that since September, “growth has been higher and economic activity is assessed to be stronger”. Meanwhile, underlying inflation pressures are expected to remain in line with the target going forward. The Riksbank assesses that “a policy rate at its current level helps to strengthen domestic demand and thus also economic activity. This, in turn, provides the conditions for inflation to stabilise close to the target in the medium term”.
• Overall, the decision was broadly in line with expectations. We thought the Q3 2025 point on the rate path may have been nudged away from 1.75% on account of improving economic activity, but were cognisant that the risk was for a flat path through the policy relevant horizon. The market reaction was very marginally dovish, with 2-year SEK swap rates falling 3bps at the time of writing. This may reflect a lack of endorsement of market pricing which assigns an ~80% implied probability of a hike next year in the rate path and press conference.
• Analysts generally expect the policy rate to remain at 1.75% throughout next year, with most hike expectations reserved for 2027.