Sveriges Riksbank Holds at 1.75%
Sweden holds citing Geopolitical Uncertainty
January 29, 2026
The Executive Board of the Riksbank has announced its decision to leave the policy rate unchanged at 1.75 per cent, effective from February 4, 2026. This decision is consistent with the central bank’s December forecast, with the Board signaling that the rate is expected to remain at this level “for some time to come.”
The Riksbank assesses that the current rate level is appropriate to support the strengthening of economic activity while ensuring that inflation stabilizes around the target in the long term. While the decision indicates stability in the immediate monetary policy stance, the update highlights a complex economic backdrop characterized by domestic resilience and rising international uncertainty.
Domestic Resilience and Inflation Targets
Domestically, the Swedish economy has demonstrated surprising strength. Despite high levels of general uncertainty, economic growth was solid at the end of last year, with household consumption continuing to rise. New data suggest that overall economic developments have been somewhat stronger than the Riksbank previously anticipated.
Regarding the central bank’s primary mandate, inflation was lower than expected in December and is now hovering close to the 2 per cent target. While the labor market situation remains weak, the Riksbank notes there are “increasingly clear signs of improvement”.
Rising Geopolitical Risks
A significant portion of the January 2026 update focuses on the external environment. The Riksbank describes the beginning of 2026 as having witnessed “dramatic” geopolitical developments, specifically citing the foreign policy and trade conduct of the U.S. administration.
These developments have introduced new volatility:
Uncertainty has increased: The range of potential future outcomes has widened, driven by U.S. trade policies and general geopolitical shifts.
Currency Fluctuations: While financial markets have reacted with limited volatility so far, the U.S. dollar has continued to weaken, including against the Swedish krona.
Fragile Sentiment: Although the Swedish economy has proven resilient to higher tariffs and geopolitical tension so far, the Board warns that sentiment among households and corporations could “deteriorate rapidly.”
Looking Ahead
The Executive Board emphasized that they remain vigilant regarding these external factors. Specific risks include the krona’s exchange rate, the impact of expansionary fiscal policies in Sweden and abroad, and the ongoing geopolitical situation. The Riksbank stated it is “prepared to adjust monetary policy if the outlook changes.”
This “Monetary Policy Update” does not contain new forecasts; the next full Monetary Policy Report, which will include updated economic forecasts, is scheduled for publication on March 19, 2026.