What to Expect from the Riksbank Interest Rate Decision

Key Takeaways

• Some economists expect Swedish inflation to fall well below target in 2026.
• Riksbank Governor Erik Thedéen is setting a high bar for another rate cut, strategists say, but other executive board members may be more open to changes.
• Despite global political uncertainty, Sweden’s economy is expected to accelerate in 2026.

Sweden’s Riksbank is expected to leave its policy rate unchanged at 1.75% at its Jan. 29 meeting, but markets will be closely watching to see whether the easing cycle has paused or effectively come to an end.

Inflation has fallen faster than expected, but improving growth momentum and a still-cautious Riksbank executive board suggest a high bar for further rate cuts, even as markets remain divided on the path ahead.

“The minutes from December indicate that Riksbank Governor Erik Thedéen is setting the bar high for changes in the key interest rate in the short term, but Deputy Governor Per Jansson may be open to a further cut if inflationary pressure becomes too low,” says Olle Holmgren, chief strategist, and Amanda Sundstrom, FX and fixed income strategist at SEB.

Inflation Expected to Fall Well Below Target

The two inflation measures, CPIF and CPIF excluding energy, are now close to the target following a sharper-than-expected decline in December, below both market and Riksbank forecasts. Nordea expects inflation to further decline markedly in 2026.

“Global price pressures have abated, while the krona has strengthened significantly and more than the Riksbank has assumed,” says Torbjörn Isaksson, chief analyst at Nordea.

“Domestic cost pressures have also subsided. For example, producer price inflation for services has largely stalled. Unit labor costs are not one of our favorite indicators, but it is worth noting that they fell in both the second and third quarters compared to the year before.”

Ulf Andersson, chief economist at investment bank DNB Carnegie, is more cautious: “With policy measures currently procyclical, upside risks to inflation remain, reinforced by structural changes in the global economy that are likely to keep underlying inflation pressures elevated.”

He therefore expects CPIF-XE inflation to dip temporarily to 1.2% year over year in 2026, before rising to around 2.4% thereafter.

Sweden’s Solid Growth Outlook Despite Global Turbulence

Tipping the scales in the other direction is the improved economic situation, and Nordea’s Isaksson says the Riksbank will closely monitor the turbulent global start to the year.

“Given what we know today, though, the economic consequences should be limited, which is also the conclusion after the events of 2025. Swedish exports were also surprisingly strong last year,” says Isaksson, adding that the focus is therefore shifting toward the domestic economy.

“Household consumption is increasing and confidence in the business sector points to upside risks also in our relatively optimistic forecast,” he says. “We are optimistic about the outlook and predict stronger GDP growth than the Riksbank. In addition, the situation in the labor market continues to improve with rising employment.”

SEB states that growth indicators for the fourth quarter were surprisingly strong, supporting the picture of an acceleration in Swedish growth ahead of 2026. In its view, the Riksbank is in a relatively comfortable position to hold off changing interest rates.

Will the Riksbank Cut Interest Rates in 2026?

While the upcoming rate decision is expected to be uneventful, SEB notes that the minutes could still reveal meaningful differences of opinion within the executive board.

“We believe that Per Jansson may be open to a cut as early as March if inflation continues to surprise on the downside at the beginning of the year. The question is whether more of his colleagues are willing to adopt a softer stance,” says SEB’s Holmgren and Sundstrom, adding that Erik Thedéen and Aino Bunge appear comfortable with the current policy stance, suggesting a high bar for further easing.

They also argue that Anna Seim is unlikely to support a rate cut, given her assessment that upside risks to inflation remain. Moreover, the appointment of a successor to Anna Breman appears to be delayed, meaning that Governor Erik Thedéen would hold the casting vote in the event of a split decision. SEB therefore maintains its forecast of an unchanged policy rate for the remainder of the year, noting that the probability of a rate cut has diminished as signs of economic growth have become more evident.

Nordea’s Isaksson also expects the Riksbank to leave its policy rate unchanged at 1.75% throughout 2026, but a rate cut in May or June cannot be ruled out.

DNB Carnegie, on the other hand, expects a first rate hike November 2026, followed by another in January 2027, and most likely a final hike in late 2027, taking the policy rate to 2.50%.

When Are the Next Interest Rate Decisions for Sweden’s Riksbank?

The upcoming rate decisions will be announced on the following dates:

• March 19
• May 7
• June 17
• Aug. 20