Riksbank leaves interest rates unchanged

On Thursday, the Riksbank announced that the policy rate will remain unchanged at 2.25 percent. At the same time, the door is closed to further cuts.

It is stated in a press release that despite the major turbulence in the world, the Swedish inflation and economic outlooks are largely holding up.

The recovery in the Swedish economy has begun, but the economic situation is still weak. Inflation is expected to be between 2 and 3 percent this year, before declining and stabilizing at the target level.

Therefore, the Riksbank has decided to leave the policy rate unchanged at 2.25 percent and also assesses that the rate will remain at its current level in the future, even though the uncertainty is considered to be “significant.”

Their forecast is that the policy rate will remain at the same level until the first quarter of 2028.

Furthermore, the Riksbank highlights that the consumer price index (CPIF inflation) has been higher than expected. The forecast for the inflation rate according to CPIF is raised from 2 to 2.5 percent for the full year 2025.

This is mainly due to an unusually large contribution from the so-called basket effect and the rapid increase in certain food prices. A more normal basket effect, lower food price increases, a stronger krona, and stable inflation expectations contribute to the inflation stabilizing near 2 percent next year.

According to the Riksbank, the global developments since the monetary policy meeting in January have been dramatic. This includes a shift in trade policy and significantly increased defense spending in Europe following a deteriorating security situation, which has implications for the economic development.

The Riksbank’s assessment for the future is that the Swedish economy is in a recovery phase, but the turnaround in the labor market is expected to take time despite this. The inflation and economic outlooks are expected to largely hold up, and the Riksbank believes this supports following the previously communicated plan for monetary policy.

The next monetary policy announcement from the Riksbank will be on May 8.

Chief Economist: Will decline

Robert Boije, chief economist at SBAB, believes that new interest rate cuts are not impossible after the summer due to the sluggish recovery in the Swedish economy and high unemployment. However, this assumes that the upturn in inflation diminishes by the summer.

– If our forecast for the policy rate is correct, the variable mortgage rates may decrease somewhat after the summer. In January next year, mortgage rates are expected to be in the range of 3.2–3.7 percent depending on the fixed term, says Boije in a statement.