Riksbank Holds Interest Rate Steady at 1.75% Amid Diverging Expert Views on Future Policy

On November 5, 2025, the Swedish central bank, Riksbank, decided to maintain its policy interest rate at 1.75%, following a 0.25 percentage point cut in September. The decision, widely anticipated, reflects the bank's view that inflation, though still above target, has begun to abate, with the KPIF inflation rate recorded at 3.1% in September. Riksbank also noted early signs of an economic recovery with stronger-than-expected growth in the third quarter, despite ongoing weakness in the labor market.

The bank’s recent interest rate path, published in September, projects the policy rate to remain unchanged through 2026, possibly rising by 0.25 percentage points to 2.00% in 2027, a projection reaffirmed by Riksbank on Wednesday. Analysts at SEB and Handelsbanken support this outlook, foreseeing the rate steady throughout next year; however, uncertainties remain due to mixed indicators in the labor market and household consumption.

Expert opinions diverge on the future course of monetary policy. Jens Magnusson, chief economist at SEB, described the decision as "reasonable," emphasizing the need for monetary flexibility given some disappointing developments in 2025 but optimistic forecasts for growth and consumption in 2026. Magnusson even considers a rate cut more likely than a hike this year. On the other hand, Susanne Spector of Danske Bank warns that the government's expansive budget for 2026 could increase household spending, thereby raising inflation risks and enhancing the probability of future rate increases.

Despite these differing views, the consensus suggests that the Riksbank views the rate pause as the end of its easing cycle for now, with the economy’s progression ultimately dictating next moves. The Riksbank confirmed its policy path stability, underlining the importance of monitoring economic and inflation trends closely over the coming months.