Market sees five more interest rate hikes from Sweden’s central bank by 2027

Two weeks ago, expectations were for four rate hikes over the same period, to around 2.75 percent.

The increased expectations among bond market traders regarding increases in the policy rate are related to a rapidly rising global interest rate level in the wake of the Middle East war's effects on inflation. The upward movement gained extra momentum before and after Wednesday's interest rate hike in the US.

The Swedish Central Bank's policy rate mainly affects short-term interest rates, such as variable mortgage rates.

If the interest rate on a three million SEK mortgage were to rise by 1.25 percentage points, the interest cost would increase by SEK 37,500 per year or SEK 3,125 per month if the effects of the interest deduction are ignored.