Swedish households may face new cost pressures as interest rates shift. State-owned SBAB has revised its forecast and now expects the Riksbank to raise the policy rate twice before the turn of the year, reaching a total of 2.25 percent. Further increases are expected next year as well.

The main reason for this shift is a growing concern about inflation. According to SBAB, the closure of the Strait of Hormuz—resulting from the war with Iran—risks remaining shut for a prolonged period.

If transport through this strategically important passage continues to be disrupted, energy and freight costs could rise, which in turn may increase global inflationary pressures.

SBAB’s chief economist Robert Boije says the bank is therefore changing its previous outlook.

“We are now shifting our forecast and including two policy rate hikes before the turn of the year,” he says.

He also points to developments around the Strait of Hormuz as a key factor behind the new forecast.

“A near-term reopening of the Strait of Hormuz appears increasingly unlikely, which should have a significantly negative effect on inflation,