MNI Riksbank Review: May 2026 - No Pressure To Act Yet

Hidden PDF

EXECUTIVE SUMMARY: 

• The Riksbank held the policy rate at 1.75% in a unanimous decision, in line with consensus. The policy statement acknowledged that “the risk that the war in the Middle East will lead to higher inflation has increased somewhat”, but that domestic inflation/activity conditions mean “there is scope to wait until there is a clearer picture of the effects of the war and the supply shocks it entails”.
• There was a small tweak to the policy statement guidance, which no longer noted that the policy rate is likely to remain at 1.75% for “some time to come”. This line was replaced with “The current level of the policy rate gives the Riksbank a good initial position to adjust monetary policy if required to safeguard the inflation target”.
• At first glance, this struck us as a marginally hawkish tweak, which potentially added a soft hiking bias to the reaction function. However, Governor Thedéen sought to play down the importance of the language in the post-decision press conference. He noted that the Board were careful with the signalling in May, deciding to concentrate on higher inflation risks relative to March and deferring any meaningful guidance changes to the June decision, where an updated MPR and rate path will be presented.