Headlines
Swedish central bank keeps key rate on hold, could still cut this year
Published by Global Banking and Finance Review
Posted on August 20, 2025
3 min readLast updated: January 22, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on August 20, 2025
3 min readLast updated: January 22, 2026
Sweden's central bank holds its rate at 2.00%, with potential cuts due to inflation and economic concerns.
By Simon Johnson
STOCKHOLM (Reuters) -Sweden's central bank held its key interest rate at 2.00% as expected on Wednesday and said it still sees some probability of a further rate cut this year as it tries to balance above-target inflation with an economy running in low gear.
Swedish growth has stalled this year with households hesitant about spending and businesses worried by tariffs and geopolitical uncertainty. At the same time, inflation rose more than expected over the summer.
"With inflation at 3.0% and the inflation target at 2.0%, we need to be vigilant," Governor Erik Thedeen told reporters at a news conference.
"That's why the board decided on an unchanged policy rate of 2.0%. There is some possibility of a rate cut during the remainder of the year."
In June, the Riksbank said there was a roughly 50% chance of a cut in the second half of the year and Thedeen said the outlook remained the same.
"We forecast that the Riksbank will cut the policy rate at the next meeting in September," economists at Swedbank said in a research note.
The Riksbank's next rate decision is September 23.
Analysts in a Reuters poll had been unanimous in expecting no change.
UNCERTAINTY
The Riksbank is one among many central banks trying to navigate a safe path through a geopolitical landscape in flux and a finely balanced outlook for inflation and growth.
It expects price pressures to ease in the months ahead as technical factors and seasonal prices for items like holidays normalise, but rate-setters remain wary that inflation could still prove sticky.
"We continue to judge further rate cuts as unlikely, though not entirely off the table," DNB Carnegie said.
A cut would be "contingent on a deterioration in the Swedish economic outlook alongside a convincing decline in inflation. Neither of these scenarios is part of our baseline," the DNB Carnegie note said.
A downgrade to flash second quarter GDP figures - which showed 0.1% growth on the quarter - or a soft inflation number for August could tip the balance toward a cut.
Final GDP numbers are due on August 29 with August inflation due on September 4.
(Reporting by Simon Johnson, Niklas Pollard and Terje Solsvik in Oslo; Editing by Anna Ringstrom and Aidan Lewis)
A central bank is a national institution that manages a country's currency, money supply, and interest rates. It oversees monetary policy and aims to maintain financial stability.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured annually.
Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates to achieve macroeconomic objectives such as controlling inflation and stabilizing the currency.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the principal amount. They are influenced by central bank policies and economic conditions.
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