Swedish interest rates

The Riksbank leaves the interest rate unchanged – opens for an increase later this year

As expected, the Riksbank leaves the policy rate unchanged at 1.75 percent.

The Riksbank's Executive Board assesses that it is well-balanced to now leave the policy rate unchanged at 1.75 percent, but they point out in a press release that the probability of the interest rate being raised later this year has increased compared to the assessment in March.

The underlying inflation is low and the economic situation is relatively weak, the central bank states, but at the same time, supply disruptions in the wake of the Middle East crisis have led to inflationary pressures rising and the risks of inflation becoming too high have increased.

“The tense situation around the Strait of Hormuz has reduced the supply of oil products and pushed up the prices of energy and fuel,” writes the Riksbank.

The Riksbank's forecast for the policy rate is being raised marginally. During the fourth quarter of this year, the policy rate is expected to be 1.82 percent, compared with the previous 1.77 percent. The percentage rate refers to the expected average interest rate during the quarter.

Thedéen: "50/50" that there will be an interest rate hike this year

It is "about 50/50" that the Riksbank will raise the key interest rate before the end of the year or not. This is what Riksbank Governor Erik Thedéen tells TT.

- These are fairly round numbers, but there is a certain inflated expectation of an increase than it has been at before, he says.

The assessment comes at the same time as oil prices have fallen sharply in the past week and are trading around the lowest levels since March. Fundamentally, lower oil prices are somewhat positive, but there is still some way to go before the oil market is fully functional again, Thedéen points out.

Analysis: The Riksbank sharpens the threat - forget about lowering the interest rate

The Swedish krona and the European Central Bank ECB's interest rate hikes are potential problems that could force the Riksbank to raise the key interest rate. This is what DN's Felicia Åkerman writes in an analysis after the Riksbank left the interest rate unchanged at 1.75 percent, but warned of an increase already this year.

If inflation takes a turn for the worse and forces the ECB to continue raising rates, the Swedish central bank will sooner or later reach a pain point where it has to stop, Åkerman reasons.

SvD's Johan Carlström notes that we would have had higher mortgage rates if we had been part of the euro cooperation and thus received a higher key rate when the ECB raised it last week. Then our mortgage interest costs would have increased in a situation where the Riksbank "thinks it is a bad idea", he writes.

DI's Nils Åkesson notes that the Riksbank is slightly tightening the threat of an interest rate increase this autumn. But even if the next interest rate change were to be delayed until well into 2027, it is an increase that is relevant – a reduction can be forgotten in the coming years, he writes.