"We do not expect any interest rate changes in the near future," writes Peder Beck-Friis, economist at Pimco - a major American player in the global bond market with $2.2 trillion in its management portfolio.
“As interest rates have been lowered over the past year to a more neutral level, the outlook for monetary policy is now more balanced on both sides,” he adds.
According to Beck-Friis, a reduction could be justified if the krona continues to strengthen, which dampens inflation via import prices. But brighter prospects for the Swedish economy and a fiscal policy that squeezes out an extra 80 billion in so-called reform space in 2026 – including a halving of the food VAT – pull in the other direction.
Austerity “eventually”
"This may eventually increase pressure on the Riksbank to tighten monetary policy," writes Beck-Friis.
The day after Wednesday's interest rate announcement from the Riksbank, Statistics Sweden's first preliminary estimate of inflation in October will be released. If it surprises upwards – as the preliminary Swedish GDP figure for September did on Wednesday – it could increase the pressure for interest rate hikes.
However, the average forecast is that inflation in Sweden will continue to moderate.
There will be no new monetary policy report attached to the interest rate announcement. Instead, what the Riksbank calls a monetary policy update will be presented, without new forecasts.
According to the Riksbank's latest so-called interest rate path, the key interest rate will remain at today's level throughout next year and will likely be raised by 0.25 percentage points to 2.00 percent in 2027.
Affects floating interest rates
The market's pricing is currently quite close to the Riksbank's interest rate path.
Economists at the major bank SEB expect the next interest rate adjustment to be an increase in June 2027. Colleagues at Nordea believe that the Riksbank will soon be ready to flag up an interest rate increase sometime "in the latter part of 2026."
The Riksbank's policy rate affects, among other things, variable mortgage rates. If the interest rate on a mortgage of three million kronor were to be increased by 0.25 percentage points, it would increase the interest cost of the loan by 7,500 kronor per year – 625 kronor per month – if the effects of the interest deduction are ignored.
