MediumIV Macro Policy & Sovereign Debt4 November 2026, Wednesday · 11:30 TRT (UTC+3)
Riksbank hikes for the first time since 2023, citing a weak krona
Sweden's central bank raised its policy rate by 0.25 points to 2% on 4 November, effective 11 November. The bank expects this year's weaker krona to push inflation above 2% in 2027 and wrote that further hikes next year are likely.
According to the Riksbank's statement of 4 November, CPIF inflation, a consumer price measure that holds the effect of mortgage rates constant, was 1.5% in September, in line with the bank's forecast. Excluding temporary fiscal measures, the same measure rises to 3%. Core inflation excluding energy came in at 1.6%, slightly below expectations.
The constraint is not headline inflation but the currency and the cost chain. The bank wrote that supply disruptions linked to the war in the Middle East and higher energy prices were keeping costs above normal. This year's weaker krona is expected to push both CPIF and core inflation above 2% in 2027. In other words, the decision was driven not by today's 1.5% but by the path of imported costs over the next 12 months.
Preliminary third-quarter data showed GDP growing and employment rising, both in line with the bank's September forecast. Household confidence fell in October while business confidence rose. According to Metromode, it is the first hike since September 2023; SCB data put the average variable mortgage rate at about 2.72% in September. The minutes will be published on 10 November and a Monetary Policy Report with new projections on 16 December. The board's vote split was not included in the bank's statement and could not be verified.
Talay assessment
Bottom line
The Riksbank hiked with headline inflation at 1.5%, showing the decision was driven not by today's prices but by 2027 costs arriving via the currency and energy. The most likely path is that the 16 December report keeps an upward rate path. If the krona strengthens or energy prices ease, a second hike could be postponed.
Likely effects
- Swedish mortgagesNegativeWeeks
Variable-rate mortgage payments rise with the 0.25-point increase from 11 November, adding pressure on household confidence, which already fell in October.
- KronaPositive1–6 months
The 0.25-point rise widens the rate differential in Sweden's favour, which could limit the krona weakness the bank sees as the source of 2027 inflation risk.
- European rate cycleUncertainWeeks
The Riksbank's hike shows the energy shock producing tightening in smaller economies outside the euro area too, giving further grounds for the ECB's 17 December decision.
Possibilities, ranked
- 1Upward path maintained55%
The 16 December report foresees at least one more hike for 2027, and the krona continues to carry imported inflation.
Watch: Rate path in the 16 December Monetary Policy Report
- 2Wait and see30%
If the krona strengthens and energy prices ease, the bank holds at 2% for an extended period.
Watch: Board members' emphasis on the currency in the 10 November minutes
- 3A quick second step15%
If CPIF excluding measures stays above 3%, a second hike comes in December.
Watch: November CPIF and CPIF excluding measures
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Policy rate▲ 2.00%
- CPIF, September▲ 1.5%
- CPIF, excluding measures▼ 3.0%