Riksbank Expected to Hold Interest Rate Steady at 1.75% on November 5 Amid Mixed Economic Signals
The Riksbank is expected to keep interest rates steady at 1.75% on November 5, weighing mixed signals from inflation and the labor market.
- • Riksbank likely to maintain interest rate at 1.75% on November 5 meeting.
- • Core inflation declined to 2.7% in September, but overall inflation stable due to electricity prices.
- • Stronger krona helps limit goods price rises, supporting inflation forecasts.
- • Labor market remains weak, posing risks to optimistic unemployment projections.
- • Future rate cuts in 2026 remain possible though current easing cycle may be ending.
Key details
The Swedish central bank, Riksbank, is anticipated to maintain its key interest rate at 1.75% during its upcoming meeting on November 5, 2025. This decision follows a rate reduction implemented in September and aligns with the central bank’s cautious approach based on recent economic data.
Core inflation has been gradually decreasing, hitting 2.7% in September, largely influenced by falling food and goods prices. However, the overall inflation rate remained steady at 3.2%, partly due to higher electricity costs. A stronger Swedish krona has helped suppress goods prices, lending support to the Riksbank's expectation that inflation will decline below its 2% target in 2026.
Despite some positive GDP growth signals, the labor market remains weak, raising concerns about the accuracy of the Riksbank’s optimistic unemployment projections, according to SEB. While most analysts agree that the current easing cycle, which began in summer 2024, has concluded, some suggest possible further rate cuts in 2026 cannot be ruled out.
The latest interest rate decision was not unanimous, with dissent from board member Anna Seim signaling nuanced internal debate. The Riksbank’s future policy direction will hinge heavily on forthcoming data regarding the labor market and broader economic conditions. Upcoming meetings in 2025 will be critical in shaping monetary policy and signaling the path for interest rates going into 2026.