The Swedish central bank has kept interest rates at 1.75% for the sixth consecutive time, signaling a rate hike towards the end of 2026.

The Swedish central bank decided to keep its policy interest rate at 1.75% for the sixth consecutive meeting, but signaled a higher likelihood of raising rates towards the end of 2026.

On June 17, 2026, at 2:58 PM, Bloomberg News reported that: The Swedish central bank decided to keep its policy interest rate at 1.75%, as expected by the market. This marks the sixth consecutive time interest rates have remained unchanged since September last year.

However, the Monetary Policy Committee, led by Central Bank Governor Erik Thedeen, indicated that the likelihood of raising interest rates later this year has increased compared to its March assessment, due to the risk that supply chain problems and tensions in the Middle East could push inflation higher again.

The Swedish central bank stated that although core inflation remains low and economic activity is weaker than normal, the committee believes that keeping interest rates at their current level is the most appropriate approach at this time.

The Swedish economy contracted in early 2023 as households and businesses were impacted by uncertainty surrounding US trade policy and the conflict in the Middle East. This prompted the government to implement measures to cut income taxes, food taxes, and fuel taxes to stimulate the economy and mitigate inflation risks.

Although inflation rose in May, it remained below the central bank's 2% target and lower than previous estimates, giving policymakers more time to reassess the situation before deciding on the European Central Bank's interest rate hike strategy.

The Swedish central bank also slightly revised its interest rate path upwards, now expecting rates to reach 2% in the last quarter of next year, earlier than its previous forecast of reaching the second quarter of 2028.

Meanwhile, the central bank has lowered its forecasts for Sweden's economic growth this year and next. Inflation is expected to remain lower than previously estimated this year but will rebound next year.

Although these forecasts do not take into account the latest developments in the Middle East, including the draft agreement between the US and Iran, the Swedish central bank believes that the current economic estimates are sufficient to serve as a basis for setting future monetary policy.

refer : bloomberg.com

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