Sweden raises key interest rate, flags further hikes
The Riksbank raised its benchmark interest rate by a quarter point to 2%, its first increase since September 2023.
Sweden's central bank, the Riksbank, announced a quarter-point increase in its key interest rate to 2% on Wednesday, aiming to tackle inflation. This is the first hike since September 2023. The bank anticipates further rate hikes in the coming year if inflation and economic activity trends persist.
The Riksbank cited several risks that could impact its economic outlook, such as supply disruptions and the potential for Sweden's economy to expand faster than expected. Additionally, the bank raised concerns about weaker demand stemming from global economic uncertainties, including geopolitical tensions, AI investment concerns, and fiscal weaknesses in certain countries.
Inflation has been a concern, with the bank's preferred inflation gauge (CPIF) standing at 1.5% in September, slightly below its 2% target. However, the rate was underpinned by temporary fiscal policies, including a food tax cut. Excluding these measures, CPIF inflation reached 3% in September.
The bank expressed confidence that inflation will stabilize around the 2% target over time, aided by its monetary policy. The interest rate had remained at 1.75% since September 2025, with Wednesday's increase marking the first since September 2023, when it was raised to a 15-year high of 4%.
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