Key Moments
- Riksbank raises its policy rate by 25bp to 2.0%, signaling that monetary conditions remain accommodative relative to neutral.
- Updated rate projections indicate further increases up to 2.3% in 2027 and 2.5% in 2028, reducing the rate gap with the ECB.
- EUR/SEK has fallen back to its 200-day moving average, testing support around 10.91/10.87 with scope for further downside if that zone fails.
Swedish Policy Tightening and SEK Performance
Societe Generale highlights that the Riksbank has implemented a 25bp hike, taking the policy rate to 2.0%, while also signaling additional tightening ahead. Despite this move, the stance is described as accommodative compared with the neutral level, which is estimated at a mid-point of 2.25%. The bank underscores that updated guidance now points to further rate increases through 2028, which would gradually compress the policy rate differential with the European Central Bank.
According to Societe Generale, the Swedish krona has delivered relatively strong performance even though the currency still faces negative carry. The EUR/SEK pair has reversed from its peak in September and has moved back toward its 200-day moving average, with the potential for additional weakness in the cross if key technical support levels are breached.
Riksbank Follows Other G10 Central Banks
“Elsewhere in G10, the Riksbank followed the RBA yesterday and the BoC last week by delivering a quarter point rate increase to 2.0%. The move was telegraphed at the September meeting. The policy rate remains accommodative relative to the neutral range (mid-point 2.25%) so further tightening could be on the cards.”
“This is also the implicit message in the statement: if the outlook for inflation and economic activity holds, the Riksbank assesses that it is likely that the policy rate will be raised further in the coming year. The path of September still holds and implies tightening to 2.3% in 2027 and 2.5% in 2028.”
EUR/SEK Technical Landscape
Societe Generale points out that EUR/SEK has broken below a multi-month rising trend line and was unable to maintain the neckline of a prior inverse head and shoulders formation. This behavior is interpreted as evidence of waning upside momentum for the cross. The pair has now descended to the 200-day moving average, while simultaneously confronting the August lows in the 10.91/10.87 area, which are viewed as a potential support region.
“EUR/SEK breached a multi-month ascending trend line and failed to defend the neckline of its previous inverse head and shoulders pattern, highlighting a lack of steady upward momentum. The pair has now reached the 200-DMA and is challenging the August trough at 10.91/10.87, which could act as a potential support zone. A brief bounce cannot be ruled out; however, the recent pivot high at 11.10/11.15 may serve as short-term resistance. An inability to hold above 10.91/10.87 could lead to a deeper decline.”
Key Rate and FX Levels at a Glance
| Indicator | Level / Projection | Comment |
|---|---|---|
| Riksbank policy rate (current) | 2.0% | Raised by 25bp, still seen as accommodative versus neutral |
| Neutral rate mid-point | 2.25% | Used as reference for accommodative stance |
| Projected policy rate (2027) | 2.3% | Implied by the maintained September rate path |
| Projected policy rate (2028) | 2.5% | Signals continued gradual tightening |
| EUR/SEK support zone | 10.91/10.87 | August trough, currently being tested |
| EUR/SEK short-term resistance | 11.10/11.15 | Recent pivot high cited as resistance |
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