- The Riksbank is expected to leave its policy rate unchanged in November after three rate cuts earlier this year.
- Another rate reduction in spring or summer 2026 cannot be ruled out.
- Core inflation is in line with the Riksbank’s forecast and is expected to fall below target next year, while the labour market remains weak.
Following the Riksbank’s decision in September to lower the policy rate to 1.75%, only two meetings remain in 2025, with the next decision due Wednesday, Nov. 5.
Most monetary policy analysts agree that the central bank has reached the end of its easing cycle, which began in the summer of 2024. However, some argue that further cuts next year cannot be ruled out.
According to SEB, core inflation has continued to decline in line with the Riksbank’s projections, reinforcing confidence that inflation will drop below target during 2026. At the same time, growth indicators have been somewhat stronger than expected, while the labour market still shows few signs of a sustained improvement.
“We believe the executive board will emphasize that risks are balanced, but in practice we think they lean to the downside next year,” says Olle Holmgren, chief strategist SEB. “A rate cut in spring or summer cannot be ruled out.”
Inflation Expected to Fall Below Target Next Year
Since the September rate cut, only one monthly inflation figure has been released. CPIF excluding energy fell to 2.7% in September, perfectly in line with the Riksbank’s forecast. The lower core inflation was driven by falling prices for food and goods, while prices for international travel and other services were higher than expected.
Swedish Inflation Slows in September
SEB notes that the stronger krona is now helping to dampen goods prices and thus inflation, and that the continued decline in inflation will strengthen the Riksbank’s conviction that inflation will drop below target at the beginning of next year.
Overall CPIF inflation remained unchanged at 3.2%, slightly above the Riksbank’s forecast due to higher electricity prices. However, the futures market for electricity has been stable, which reduces the risk of new inflation surprises going forward.
With an inflation target of 2% for CPIF, inflation remains elevated. But according to Torbjörn Isaksson, Chief Analyst at Nordea, the Riksbank is forward-looking and focused on its projection that inflation will decline next year. Nordea shares this view but also points out that inflation expectations have recently increased.
“One minor concern for the Riksbank is that inflation expectations have risen, according to Origo Group’s surveys. So far, it is mainly in the monthly surveys that price expectations have risen, and they therefore carry little weight in the decision-making process”, says Isaksson.
Stronger Growth but Weak Labor Market
While the Riksbank looked ahead on inflation, it was more backward-looking on GDP growth and the labour market. “The Swedish economy was described as ”weak and shaky”. One key reason for cutting the policy rate in September was to ensure the recovery gains momentum,” Isaksson noted.
On the growth side, however, indicators have improved somewhat. GDP appears to have stabilized in the third quarter, and both sentiment and production data point to a recovery. Still, SEB writes that more positive signals are needed to confirm the Riksbank’s forecast of 2.7% GDP growth in 2026.
Nordea is somewhat more optimistic about the economic outlook, particularly for 2026. “Households have made significant progress in improving their finances, and the rate cuts have not yet fully filtered through to the economy,” said Isaksson. “Fiscal policy is providing a substantial boost this year and even more so next year. The Riksbank is likely to stress that the economy has broadly developed as expected, while we see upside risks to the GDP forecast for 2026 .”
The labour market, however, remains weak. SEB considers the Riksbank’s unemployment forecast too optimistic and expects the Executive Board to stress that developments in the labour market and incoming data will be key for future policy decisions.
Will the Riksbank Cut Interest Rates in 2026?
Expectations were unusually divided ahead of the September meeting, when the Executive Board decided to lower the policy rate by 25 basis points to 1.75%. The decision was not unanimous, as Anna Seim dissented, arguing instead for an unchanged rate. The Riksbank’s rate path was left unchanged at 1.75%, signalling that the Board viewed the easing cycle as complete.
Sweden’s Riksbank Cuts Interest Rates to 1.75%
According to Nordea’s Isaksson, a drastic change would be required for the Riksbank to move the rate again in December, while the outlook for next year is more uncertain.
“Over the next six months, the likelihood of lower inflation is high, which means a rate cut cannot be ruled out in the first half of next year,” he says. “At the same time, the economic outlook has improved, which suggests that the Riksbank will keep the policy rate unchanged after all and shift the risk assessment towards a possible rate hike in the latter part of 2026.”
SEB also believes that the risks are greater on the downside next year and that an interest rate cut in the spring or summer cannot therefore be ruled out.
When Are the Next Interest Rate Decisions for Sweden’s Riksbank?
Only two Riksbank meetings remain in 2025. Rate decisions will be announced on the following dates:
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