Sweden Interest Rate

The Swedish Riksbank maintained its policy rate at 2% in August 2025, in line with expectations, as inflation has risen more than anticipated but is deemed temporary, while economic activity remains weak. Recent data showed inflation somewhat above target, but the upturn is likely driven by short-lived factors, with several indicators suggesting it will ease back toward 2%. Growth is still subdued, household consumption is cautious, and the labour market shows little improvement. International conditions remain uncertain, with geopolitical tensions and US trade negotiations adding risks. Still, rising real wages, previous rate cuts, and improving business confidence provide some grounds for recovery, albeit at a sluggish pace. Given these conditions, the central bank decided to hold rates steady, maintaining the June assessment that the outlook is largely unchanged and leaving open the possibility of a further rate cut this year if inflation subsides and economic weakness persists.