MNI RIKSBANK WATCH: Holds, Edges Up Rate Path

The Riksbank left its policy rate on hold at 1.75% at its December meeting, as widely expected, and the Executive Board stated that it expected it to stay at that level "for some time to come."

The decision was widely expected, but the Swedish central bank also raised its rate path slightly to point to tightening ahead.

The policy rate was shown rising marginally to 1.77% by Q4 next year and 1.94% by Q4 2027, then on up to 2.12% by Q4 2028.  The previous path had indicated unchanged policy in 2026, while the new path suggests two hikes are likely over the three-year forecast period if things evolve as expected.

In its new forecasts, inflation on the CPIF measure was shown falling well below target in 2026 to 0.9%, down from 1% foreseen previously.

In its Monetary Policy Report, the Riksbank said that it took the view that high inflation in 2025 had been due largely to technical factors, including CPIF weight changes, and that key factors such as labour costs and resource utilisation "indicate normal inflationary pressures going forward." (See MNI INTERVIEW: Riksbank's Thedeen Sees Policy Rate Stimulative)

As a result underlying inflation is expected to rise back to target and the Riksbank said it expected the krona, which has risen markedly, would appreciate a little further, pushing down on inflation.

Growth is expected to gather pace next year, having surpassed expectations in late 2025. The Riksbank raised its 2025 GDP growth forecast to 1.5% from 0.9% and predicted 2.9% growth in 2026, up from 2.7%.

There was no new announcement on widening the rate corridor. The Riksbank is considering this and it restated in the MPR that it wants to find ways to boost activity in the krona interbank market.