Riksbank: Rate hike risks rise – Nomura

Analysts from Nomura have indicated that the probability of the Swedish Riksbank raising its policy rate earlier than expected is increasing. Currently, Nomura anticipates the Riksbank to maintain its rate at 1.75% throughout 2026. However, stronger economic activity, energy risks linked to the Middle East, and the European Central Bank's (ECB) anticipated tightening are driving up the likelihood of an earlier Riksbank rate hike compared to the current forecast of December 2027.

In July, the inflation rate, excluding energy costs and constant taxes, was recorded at 1.3% year-over-year, consistently remaining below the 2% threshold. Despite this, recent economic activity has shown significant improvement, and the ongoing closure of the Strait of Hormuz has heightened inflation risks. Although Nomura does not foresee the Riksbank voting for a rate increase at this time, they acknowledge the growing uncertainty surrounding their forecast, which now suggests a possible earlier hike than initially expected.

The Riksbank's forthcoming statement is expected to continue emphasizing high uncertainty and readiness to act if necessary, but it may refrain from providing formal guidance on future policy rates until a forecast meeting. Nomura maintains its forecast of no policy rate change this year, but they still predict a rate hike at the end of 2027.

They acknowledge that there are significant risks to this forecast, including the possibility of a rate hike being brought forward, which is reflected in market expectations of one to two hikes by the end of the year.