Nordea economists Kjetil Olsen and Sara Midtgaard anticipate that Sweden's central bank, Riksbank, will keep its policy rate unchanged at 1.75% during its meeting on 19 March and maintain this rate through most of 2026 [1]. This expectation is based on only modest revisions to inflation forecasts and significant uncertainty regarding energy prices, largely stemming from the ongoing conflict in the Middle East [1]. Nordea has increased its forecast for CPIF inflation by approximately 0.5 percentage points in response to the war, aligning its outlook with the Riksbank's December assessment [1].
The risk balance for the policy rate has shifted from a clear bias toward rate cuts to a more neutral stance, with the central bank likely to adopt a wait-and-see approach in the near term [1]. Nordea notes that the Riksbank is prepared to act if circumstances change, but current conditions suggest the rate path will remain intact, implying no change in the policy rate throughout most of 2026 [1].
Market implications are characterized by increased uncertainty, particularly regarding energy prices, which could prompt rapid changes in policy if the situation evolves [1]. Nordea emphasizes that the longer the conflict persists, the greater the likelihood of a rate hike, although for now, the central bank is expected to remain sidelined [1].
CONCLUSION
Nordea expects the Riksbank to keep its policy rate unchanged at 1.75% due to modest inflation revisions and heightened uncertainty from the Middle East conflict. The risk profile has shifted to a more balanced stance, with the central bank likely to maintain its current rate path unless conditions change significantly.