NextFin news, On Tuesday, September 23, 2025, the Swedish central bank, Riksbanken, announced it would maintain its key interest rate at 2.0%, opting not to lower rates despite market speculation. The decision was made during the bank's scheduled monetary policy meeting in Stockholm.
The Riksbank cited a recent rise in inflation as a primary factor influencing its decision. In August 2025, the Consumer Price Index with a fixed interest rate (CPIF) increased to 3.2%, marking the highest level since early 2024 and exceeding the bank's forecast by 0.5 percentage points. Core inflation, which excludes energy prices, was slightly lower at 2.9%, providing some reassurance but not enough to prompt a rate cut.
Additionally, the labor market remains a concern, with the unemployment rate elevated at 8.8%, despite some volatility in recent data. This persistent job market weakness suggests that while the Riksbank is pausing now, the possibility of future rate cuts remains if economic conditions do not improve.
Economic indicators present a mixed picture: manufacturing Purchasing Managers' Indexes (PMIs) have improved to their highest levels this year, consumer confidence has been rising since April, and July consumption increased by 2.4% year-on-year. However, monthly GDP fell by 0.2% in July, indicating that the anticipated economic recovery driven by lower interest rates has yet to fully materialize.
The Riksbank's decision aligns with market expectations, which priced in only about a 30% chance of a rate cut at this meeting. The bank's communication suggested that while the easing cycle may be paused, it has not been definitively ended, leaving room for potential future adjustments depending on inflation and labor market developments.
Following the announcement, the Swedish krona (SEK) showed potential for appreciation, with analysts expecting the EUR/SEK exchange rate to fall below 11.0 by the end of the year, supported by the stable interest rate environment.
Sources: Riksbanken official statements, ING Think economic analysis (https://think.ing.com/articles/riksbank-set-to-hold-not-ruling-out-more-easing/), TradingView Reuters report (https://www.tradingview.com/news/reuters.com,2025:newsml_S8N3LD03J:0-swedish-central-bank-may-still-lower-rates-this-year-minutes-show/).
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