MNI: RIKSBANK WATCH: Holds In Nov, Foresees Prolonged Pause

Sweden’s Riksbank left its policy rate on hold at 1.75% at its November meeting and stated that the economy had evolved largely as anticipated, with its September forecast for a prolonged policy pause holding good.

The Executive Board stated that the latest data supported its view that recent elevated inflation was transitory, that there were signs of growth picking up and that the policy rate "is expected to remain at this (1.75%) level for some time to come."

November is an interim meeting, with no new forecast round and the Board's economic assessment was that there had been no major changes to the outlook.

Inflation on the target fixed-interest-rate CPI measure was 2.7% in September, above the 2.0% objective but declining in line with the central bank's forecast, and "the new inflation figures strengthen the Riksbank's earlier assessment that the elevated inflation is transitory.”

CONSUMPTION UNCERTAINTY

A key uncertainty on the domestic side is how the mix of increased fiscal stimulus and continued geopolitical risks play out for household consumption. 

It is not clear "how much households will choose to consume when their incomes rise going forward, which could affect how much the fiscal policy stimulus boosts economic activity.”

There are signs that lower interest rates are having a positive impact on household consumption, the Board noted, though the saving rate rose again, to 16.2% in Q2. (See MNI INTERVIEW: Riksbank Head -Equal Chance Next Move Cut, Hike)

As demand in the economy strengthens, the Riksbank expects the labour market to begin to recover in early 2026. It saw signs of a turnaround in the labour market, with job vacancies rising and firms' recruitment plans having increased, though unemployment at 8.8% in Q3 was historically high.

The Riksbank restated its view that the krona, which has been at the top of the pack for advanced economy currency performance in 2025, "will continue to strengthen somewhat going forward and contribute to dampening inflation."