- Decision
- Lower
- Rate change
- 25 bps
- policy rate
- 1.75%
Sveriges Riksbank’s Executive Board cut the policy rate by 25 bp to 1.75 % with effect from 1 October, aiming to bolster a still-weak recovery and secure medium-term inflation convergence to the 2 % target as headline inflation stayed “elevated” in August while energy-adjusted measures eased and the krona firmed. After reductions of 25 bp in January and June and a hold in August, the cumulative easing over 2025 now totals 75 bp. The Board notes conditions for stronger activity have improved but growth and labour-market recovery remain sluggish, with unemployment projected at 8.7 % in 2025 and GDP growth at 0.9 %. CPIF inflation is forecast at 2.6 % in 2025, dipping to 1.0 % in 2026 before returning toward target. Externally, geopolitical tensions and uncertain US trade policy continue to cloud the global growth outlook, although it is “largely unchanged”, while a firmer krona supports the disinflation narrative. One deputy governor opposed the cut, favouring a hold amid concerns that a vulnerable supply side and expansionary 2026 fiscal policy could lift inflation. The Board expects the rate to stay at 1.75 % for “some time”, but flags that lingering uncertainty around inflation persistence, household saving and global risks could warrant policy re-assessment.
Rate evolution
From June 2025 to September 2026, the Riksbank lowered the policy rate from 2 per cent to 1.75 per cent, cutting in June and September 2025 and then holding it unchanged. The June cut reflected a recovery that had lost momentum, a softer inflation outlook, weak growth and high unemployment, while an August pause treated above-target inflation as temporary despite weak activity, and the September cut followed signs of easing inflation pressures even as the recovery and labour-market improvement remained delayed.
During subsequent holds through June 2026, the Riksbank said inflation had moved close to target and then below forecast while activity improved only tentatively, but uncertainty widened from trade policy and domestic demand to the war in the Middle East, energy and commodity prices, the krona and fiscal policy. On 17 June, it judged that underlying inflation was low and activity somewhat weaker than normal, but raised its policy-rate forecast somewhat and flagged a greater probability of an increase later in 2026 as war-related supply disruptions lifted inflationary pressures.
On 20 August, the Riksbank held the policy rate at 1.75 per cent, noting that growth and inflation had exceeded its June forecast but that subdued company pricing plans, fewer global supply-chain disruptions and weaker-than-expected labour-market developments left the overall outlook largely unchanged. On 24 September, it again held the rate at 1.75 per cent, but said stronger, broad-based activity and continued supply shocks meant the policy rate should rise more than projected in June, with increases expected to begin in 2026 if the outlook remained unchanged, as inflation pressures remained above normal despite measures of underlying inflation being relatively close to 2 per cent.