MNI RIKSBANK WATCH: Iran News Puts Spotlight On Guidance

The Riksbank is expected to leave its policy rate on hold at 1.75% at its June meeting, while news of a potential resolution to the Iran-U.S. conflict will have come too late to be fully factored into its quarterly rates path, putting more focus than usual on Governor Erik Thedeen's comments at the press conference on Wednesday.

The previous quarterly forecasts in March had the policy rate up just a couple of basis points in Q4 and at 1.81% in Q1 2027. The new path is likely to be higher, tilting towards a hike in 2026, but Thedeen will now be able to endorse or downplay the rate path in light of unfolding events in the Persian Gulf.

Markets now price in just under a full 25-basis-point hike this year, but analysts are split over timing.

The first three quarters of the forecast are based on the Executive Board's judgement, with the rest model driven. 

Board members have been split over the likelihood of a near-term hike and at the most recent meeting did not endorse any central scenario.

Deputy Governor Anna Seim has said a rate hike could be justified and Thedeen has also made clear that he was open to tightening, as he was not prepared to allow the Riksbank to be seen to be slow to respond if inflationary pressures mounted. But their colleagues have been more neutral.

 The Swedish central bank had previously set out a higher inflation and rate scenario based on a prolonged Iran conflict, but that scenario now risks looking obsolete and it may be retired. (See MNI INTERVIEW: No Hike Delay If Shock Lasts-Riksbank's Thedeen)