Riksbank Leaves Policy Rate Unchanged at 1.75
Amid Brighter Economic Prospects
Stockholm December 18th —
The Executive Board of the Riksbank has decided to keep the policy rate unchanged at 1.75 per cent, effective from 7 January 2026. This decision comes as the prospects for the Swedish economy appear brighter, and the recovery is confirmed to be underway, although it is expected to take time before economic activity returns to normal. The policy rate is expected to remain at 1.75 per cent for some time to come, provided the outlook for inflation and economic activity holds.
Economic Recovery Strengthens
The overall economic outlook is assessed as slightly better compared to previous forecasts. Economic activity is considered stronger, with growth rates higher than those forecasted in September. Forecasts suggest calendar-adjusted GDP growth will reach 2.9 per cent in 2026, up from the 2.7 per cent predicted in September, and 2.5 per cent in 2027.
The situation in the labour market remains weak, yet there are increasingly clear signs that improvements are starting. However, the unemployment forecast for 2026 is slightly higher at 8.6 per cent, compared to 8.4 per cent assessed in September.
Inflation Approaching Target
Inflation has approached 2 per cent and has generally developed in line with the Riksbank’s September forecast. Indicators continue to support the view that inflationary pressures will align with the target going forward. The inflation outlook is assessed to remain the same, providing the conditions for inflation to stabilise close to the target in the medium term.
The forecast for CPIF (Consumer Price Index with fixed interest rate) is 0.9 per cent for 2026 (a slight decrease from the 1.0 per cent forecasted in September) and 1.7 per cent for 2027.
Rationale for Unchanged Policy
The Executive Board assesses that maintaining the policy rate at the current level of 1.75 per cent helps to strengthen domestic demand and, consequently, economic activity. This stabilization, in turn, facilitates inflation stabilizing near the target in the medium term. The policy rate is expected to remain stable through the third quarter of 2026. Looking further ahead, the policy rate is forecasted to rise gradually, reaching an annual average of 1.9 per cent in 2027 and 2.1 per cent in 2028.
Key Risks and Uncertainty
While the outlook is improving, the environment for both inflation and economic activity remains uncertain. The Riksbank noted that risks exist both internationally and within Sweden.
Foreign Risks include geopolitical conflicts, uncertainty surrounding US foreign and trade policy, weak public finances in several countries, and high asset valuations in financial markets.
Domestic Risks centre on uncertainty regarding household consumption behaviour and the potential effects of next year’s more expansionary fiscal policy.
The Riksbank affirmed that it is closely monitoring developments and is prepared to adjust monetary policy if the outlook changes. The decision and accompanying documents, including the Monetary Policy Report, were updated on December 18, 2025, with the minutes of the Executive Board’s monetary policy meeting slated for publication on 30 December 2025.