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Riksbank Sees Rising Chance of 2025 Hike, Reuters Poll Shows
12 of 18 economists in a Reuters poll now expect a Riksbank rate hike before year-end, up from 8 in March. The Iran war and krona weakness drive the shift in policy outlook.
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Sweden's central bank will leave its policy rate unchanged at this week's meeting. The median forecast in a Reuters poll of 18 economists, released Monday, now shows a majority expect a hike before year-end.
Twelve of the 18 respondents said the Riksbank will raise its benchmark rate from 3.75% in the second half of 2025. The previous survey in March had 8 of 18 expecting a move. The remaining six forecast no change through next year.
The shift reflects the impact of the Iran war on European energy costs. Sweden imports roughly half its energy. Higher oil and gas prices have pushed up headline inflation and kept core price pressures stickier than the central bank's models projected. Governor Erik Thedéen said in March that the bank would need "clear and sustained" evidence of fading inflation before cutting. The war has extended that timeline.
The krona's weakness against the euro amplifies the cost of those energy imports. The currency has lost 4% against the euro this year, adding to imported inflation. A rate hike would support the krona by widening the interest rate differential with the euro area. The European Central Bank is expected to hold steady through the summer, and markets see the Federal Reserve cutting rates in the second half. That divergence would make the krona more attractive to carry traders.
Sweden's economy is already deteriorating. GDP contracted 0.3% in the fourth quarter. The Riksbank's February staff forecast showed growth of just 0.6% for 2025. Raising rates would squeeze households carrying floating-rate mortgages, which account for roughly 60% of outstanding home loans. The bank must weigh that cost against the risk of letting inflation become entrenched.
The unanimous view among economists is that the rate stays at 3.75% when the committee announces its decision Thursday at 9:30 a.m. Stockholm time. The rate statement and updated economic projections will be released simultaneously. Thedéen holds a press conference at 10:30 a.m.
The poll shows the balance of risks has tilted clearly toward tighter policy. The question for traders is whether the Riksbank signals that tilt in Thursday's statement or waits until the next meeting in September, when the war's trajectory and energy prices will be clearer.