Swedish Riksbank Rate Hike View Delayed to Early 2027 - Nomura

Nomura Securities' European economics team noted in its latest report that the Swedish Riksbank's decision to hold its policy rate at 1.75% reinforces its assessment that the bank may not begin raising rates until early 2027. This view contrasts with earlier market expectations of a potential rate hike by the Riksbank in the second half of the year.

**Uncertainty in Inflation Outlook and Policy Path**

While holding rates steady, the Riksbank raised its 2027 inflation forecast to 2.7%, but this did not translate into immediate tightening action. The Nomura team analyzed that despite rising inflation risks, current economic activity remains weak, and fiscal policy exerts a dampening effect on prices, allowing the central bank to maintain patience. They believe the Riksbank would need to see clearer and more sustained evidence of upside inflation before considering policy adjustments, a process that could take several months.

**Divergence from ECB Policy Pace**

Notably, Nomura's assessment of the Riksbank differs from market expectations for the European Central Bank. Reports indicate that most economists expect the ECB to raise rates again, potentially in September. However, Nomura strategists have previously anticipated that the Riksbank would remain on hold throughout 2026. This suggests that even amid widespread inflationary pressures in Europe, central bank policy paths are diverging due to differing domestic economic conditions.

**Market Expectations and Long-Term Rate Outlook**

Market data shows that Sweden's benchmark rate currently stands at 1.75%. According to some analytical model projections, Swedish rates could trend toward 2.00% by 2027. Nomura's latest view — that rate hikes may occur in early 2027 — is broadly aligned with this long-term projection path, while emphasizing that the timing of the start could be later than initially envisioned by some market participants.