The closure of the Strait of Hormuz in the Persian Gulf - an effect of the Iran war - may remain in place for a while longer, according to SBAB chief economist Robert Boije. This is expected to increase global inflationary pressure, including through higher energy and transport prices.
"We are now changing our forecast and are including two increases in the key interest rate before the end of the year," he says in a press release.
"An opening of the Strait of Hormuz in the near future now appears increasingly unlikely, which should have a significant negative impact on inflation," he adds as justification for the new forecast.
Increases in November and December
The two increases - from 1.75 to 2.25 percent in the key interest rate - will likely come in November and December, according to Boije.
Prior to this forecast, SBAB's economists expected the Swedish Central Bank to keep its key interest rate at 1.75 percent for the rest of the year.
SEB senior economist Robert Bergqvist also expects the key interest rate to rise. He describes the interest rate level of 1.75 percent as "probably somewhat expansionary" while at the same time being concerned by all the consumption-oriented election promises from the parliamentary parties.
"We could be moving towards a situation where the Riksdag gives households with one hand and the Swedish Central Bank takes back with the other. The monetary policy equation is becoming increasingly complex," he writes in a report.
The Swedish Central Bank's policy rate primarily affects short-term interest rates, such as variable mortgages.
Even on longer maturities
The upward pressure on interest rates is also present on mortgages with longer maturities, which are set based on what banks have to pay when they borrow on the bond market.
The yield on a ten-year Swedish government bond - a market benchmark - has risen from 2.53 percent at the end of June to 2.89 percent. The ten-year yield in the US has driven the trend globally, rising from 4.37 to 4.68 percent during the same period.
The trend is also visible in the market's pricing of the Swedish Central Bank's policy rate. A hike in the policy rate to 2.00 percent this year is fully priced in by market participants. And in the first half of 2027, professionals expect two more hikes, to 2.50 percent.
If the mortgage interest rate were to be raised by the same amount - 0.75 percentage points - a mortgage of three million kronor would become 1,875 kronor more expensive per month next year, disregarding the effects of the interest deduction.
