Key Moments
- Brown Brothers Harriman (BBH) expects the Riksbank to leave its policy rate unchanged at 1.75% for a sixth consecutive meeting.
- BBH anticipates the central bank will push back against market expectations for a 25 bps rate increase by year-end, viewing this stance as negative for SEK.
- The updated Riksbank forecast is likely to show no rate changes through Q4 2026 and may shift the timing of the first full 25 bps hike to late 2027 from Q1 2028.
BBH Outlook on Riksbank Policy
Brown Brothers Harriman (BBH) projects that the Riksbank will maintain its policy rate at 1.75% for a sixth straight meeting. According to BBH, policymakers are expected to resist current market pricing that implies a 25 bps rate hike by the end of the year, a stance the firm views as weighing on the Swedish Krona (SEK).
Policy Path and Market Implications
BBH highlights that the Riksbank is “widely expected to keep the policy rate at 1.75% for a sixth consecutive meeting (Thursday).” The firm adds: “We expect the Riksbank to lean against market pricing for a 25bps hike by year-end which is a headwind for SEK.”
The bank further notes that the forthcoming Riksbank projections are likely to maintain a steady-rate outlook through Q4 2026. At the same time, BBH expects a possible adjustment in the projected start of rate hikes, with the first full 25 bps increase potentially moved forward to late 2027 from Q1 2028.
Inflation Backdrop Supports Extended Hold
BBH attributes the likely extended period of unchanged rates to Sweden’s current macroeconomic conditions. “The updated Riksbank forecast is likely to continue signaling no change in rates through Q4 2026, though it may bring forward the first full 25bps hike to late 2027 from Q1 2028. Sweden’s benign inflation backdrop alongside ample spare capacity in the economy argue for an extended Riksbank hold.”
Policy Rate and Forecast Timeline
| Item | BBH Expectation |
|---|---|
| Current policy rate | 1.75% |
| Consecutive meetings at 1.75% | Sixth |
| Market pricing for year-end | 25 bps hike (Riksbank expected to lean against) |
| Policy rate outlook | No change through Q4 2026 |
| First full 25 bps hike (prior view) | Q1 2028 |
| First full 25 bps hike (possible new timing) | Late 2027 |
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