Sweden’s central bank left its policy rate unchanged at 1.75% in June 2026 but signaled a higher likelihood of an interest rate increase later this year, citing rising inflation risks. Inflation remains subdued for now, held down in part by fiscal policy measures, while economic activity is weak. However, policymakers stressed that prolonged supply disruptions linked to the conflict in the Middle East have intensified inflationary pressures and could further magnify price effects if they continue.
The Riksbank’s baseline scenario assumes oil supply will normalize in the near term, with prices expected to decline, thereby limiting the pass-through to import and consumer prices. Nonetheless, the central bank underlined that uncertainty around this outlook remains substantial.
Reflecting recent developments, the Riksbank lowered its inflation forecast for 2026 to 0.6% from 0.8% in March, but raised its 2027 projection to 2.7% from 2.0%. Inflation expectations for 2028 were little changed, at 3.4%.
