Riksbank Raises Rate to 2%, Expects Core Inflation to Exceed Target in 2027

Key Facts

Sweden’s central bank, the Riksbank, raised its policy rate by 0.25 percentage point to 2%, with the decision taking effect on November 11, 2026, according to a statement by its executive board issued on November 4. The bank linked the move to expectations that inflation will continue to rise, amid strong economic activity and costs from supply disruptions. It said in the statement that “stronger economic activity, together with cost increases caused by supply disruptions, means inflation is expected to continue rising in the period ahead.” The decision marks a shift from holding the rate at 1.75% in September to raising it now, after the bank judged activity to be stronger and supply shocks to be ongoing. It said then that rates would need to rise further in the future than it had projected in June for inflation to stabilize around 2%.

The increase comes as September readings show a divergence between measured inflation and inflation after excluding the effects of temporary fiscal measures. CPIF inflation, the consumer-price measure targeted by the bank, was 1.5%, in line with the Riksbank’s latest forecast. But the bank said the reading was 3% when the direct effects of those temporary measures were excluded. The core inflation measure that excludes energy prices stood at 1.6% in the November statement, slightly below expectations. This mix leaves headline inflation below 2%, while the adjusted reading and core measure point to varying price pressures across components.

The Riksbank framed its decision against an economic recovery that had gained momentum, alongside risks to both inflation and growth. Preliminary statistics showed GDP rose in the third quarter and employment increased, both in line with the bank’s forecasts. In October, household optimism fell, while business optimism rose again. The bank warned that the persistence of the causes of supply disruptions raises the risk of inflation becoming too high, and said accelerating activity means the economy could grow faster than expected. At the same time, it pointed to risks from weak demand linked to the global economy, keeping the impact of external developments part of its assessment of the economic outlook.

The bank had already raised its rate-path projections in September compared with its June forecasts, while leaving the rate at 1.75% at the time. The path published in September showed an average expected rate of 1.85% in the fourth quarter of 2026, versus 1.82% in the June forecast. For the first quarter of 2027, the expected average was 2.07%, compared with the June estimate of 1.89%. The comparison shows that September’s forecasts had pointed to a higher path before the current rate increase. In its September statement, the bank linked the need for a larger increase than the path projected in June to continued strong activity and supply shocks, with the aim of returning inflation to around 2%.

In its latest outlook, the Riksbank said strong activity, the costs of supply disruptions and a weak krona during the year are expected to push CPIF and core inflation above 2% in 2027. It added that another rate increase next year is likely if the outlook for inflation and economic activity remains stable. The bank said: “If the outlook for inflation and economic activity remains stable, the Riksbank considers it likely that the policy rate will be raised again next year.” But the monetary policy update accompanying the decision includes no new forecasts, according to the statement, so the next rate-path estimate will come in the next Monetary Policy Report. The bank set December 16, 2026, as the publication date for that report, which will include new forecasts.

Before the new forecasts are released, the minutes of the Monetary Policy Committee meeting are scheduled to be published on November 10, 2026, according to the timetable set out by the Riksbank. The minutes offer the next opportunity to review the meeting’s discussions, while the December 16 report will contain the next forecasts. Meanwhile, the rate increase remains in effect from November 11, as specified in the statement. The bank had clarified that its current update includes no new forecasts, making the December Monetary Policy Report the next announced update to its projections. The statement’s forward guidance centers on the possibility of another increase if the inflation and activity outlook remains on the path the bank expects.