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, increased its key interest rate by a quarter point to 2% on Wednesday in an effort to tackle inflation. This marks the first hike since September 2023. The bank cited stronger economic activity, supply disruptions due to the Middle East conflict, and a weaker krona as factors causing inflation to surpass the 2% target.
The Riksbank warned that further rate hikes are likely if inflation and economic activity projections remain accurate. After the rate increase, the bank's monetary policy aims to stabilize inflation around the 2% target over time. The consumer price index with a fixed interest rate (CPIF), the bank's preferred inflation indicator, stood at 1.5% in September, but excluding temporary fiscal policy measures, the rate was 3%.
The bank identified several risks that could impact its economic outlook, such as supply disruptions and the potential for Sweden's economy to expand faster than anticipated. Other risks include weaker demand stemming from global economic uncertainties, including geopolitical tensions, AI investment concerns, and weak public finances in certain nations. The interest rate had remained at 1.75% since September 2025, with the latest hike being the first since September 2023 when it was raised to a 15-year high of 4%.
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