Riksbank preview: Hold now, hike in November
The desk anticipates that the Riksbank will opt for a hawkish hold at its upcoming meeting, indicating a likely hike in November. Per the full note , while there is a possibility of a surprise hike on September 24, the Riksbank's current stance reflects its cautious approach to inflation dynamics and external market pressures. The expectation builds on signals of rising inflation due to energy price increases and a weaker krona, reinforcing the view that tightening is on the horizon in the coming months, possibly at the November or December meetings.
What the desk is arguing
We expect the Riksbank to adopt a hawkish hold during its September 24 meeting, preparing the ground for a hike likely to materialize in November. This aligns with perceptions of mounting inflationary pressures amid rising energy costs and ongoing central bank tightening elsewhere, particularly from the ECB and the Federal Reserve.
A recent uptick in oil prices and expectations of a weaker krona support this argument. The current inflation reading of 1.3% (excluding energy) is still below the Riksbank's target, but with recent energy price trends, the central bank might be incentivized to adjust its policy stance to combat potential inflationary spikes.
Where it sits in our coverage
The desk's expectations align closely with current market forecasts. Our consensus target for EUR/SEK is 1.075, which falls within a range of 1.04 to 1.12. Specifically: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
While the desk's view leans toward the middle of this spread with a slight bullish tilt, it remains sensitive to the risk of deviations based on upcoming inflation data or further geopolitical developments.
How other firms see it
Most firms are aligned in their outlook, with jpmorgan backing upward motions in the SEK due to convincing inflation signals, while bofa presents a more conservative viewpoint, expecting the SEK to struggle against the EUR in the short term.
In particular, movements in related pairs such as EUR/USD and shifts in Federal Reserve policy could significantly impact SEK valuations and mirror Riksbank strategies going forward.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Riksbank likely to hold rates at 1.75% in September, with a hike expected in November.
- 02Inflation is currently benign, but upward pressures are evident from rising energy prices.
- 03Current EUR/SEK consensus target is 1.075, with a range of 1.04 to 1.12.
- 04The outcome of the September meeting could set the tone for subsequent rate moves.
Market implications
Traders should keep an eye on the EUR/SEK near the 1.075 level as a potential inflection point. Key developments from the Riksbank on September 24 could set the tone for positioning ahead of November's anticipated hike, influencing broader Scandinavian currency behaviors.
Risks to this view
A failure to hike in September against a backdrop of rising inflation could result in a stronger SEK, reversing market expectations. Additionally, any geopolitical shock that stabilizes energy prices or reaffirms lower inflation could risk derailing the anticipated rate path.
Articles Riksbank preview: Hold now, hike in November Published 11:37 Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download A surprise hike shouldn’t be entirely ruled out on 24 September, but we favour a hawkish hold instead, with strong hints that tightening is coming. We expect a hike at the November meeting, followed by at least another one by end-1Q27. We have revised our EUR/SEK profile higher on the back of our new Fed and ECB calls , but SEK appreciation remains our baseline Francesco Pesole The Riksbank has been on hold despite energy price increases Consensus is in favour of the Riksbank staying on hold at 1.75% on 24 September.
We agree: August inflation undershot expectations and does not call for immediate action. Still, external pressure is mounting, and a surprise hike cannot be fully ruled out. Higher oil prices and the more proactive stance of the European Central Bank and Federal Reserve could lead the Riksbank to bring forward a hike that already looked likely early next year, as inflation gradually moves back above target.
We are therefore revising our call and now expect a 25bp hike in November or December, with a preference for November. We do not expect back-to-back moves, with the following hike in February or March. Inflation muted, but should rise Swedish inflation is not easy to measure this year.
The Riksbank has acknowledged the dampening effect of temporary tax measures and shifted its focus towards more core measures. As shown below, the headline tax-adjusted inflation is slightly above target but the index excluding energy stabilised at 1.3% in July and August. These inflation dynamics are far from alarming, and broadly in line with the Riksbank’s main scenario presented in June.
That said, the direction of travel for inflation remains higher. Accommodative policy, the likely expiry of tax cuts this autumn, rising energy prices and a weaker krona all point to upside risks. We expect the Riksbank to revise its inflation forecasts higher at the September meeting.
In particular, a core inflation forecast above the current 2.0% for 2027 could be read as an implicit endorsement of market pricing for multiple rate hikes. Sweden's inflation has been dampened by tax effects Source: ING, SCB "> Source: ING, SCB Strong growth in 2Q, slower in 3Q Second quarter growth surprised to the upside, with annual growth reaching 3.3%, well above the Riksbank’s 1.9% forecast. Strong fixed investment, household consumption and net exports were the main drivers.
However, GDP contracted by 0.8% month-on-month in July, suggesting momentum weakened at the start of the third quarter. Meanwhile, the unemployment rate rose sharply to 8.9% in August, although the Riksbank is likely to view these job figures with a degree of caution. No urgency now, but November hike on the cards Overall, we expect the Riksbank to leave rates unchanged in September while signalling that a hike is drawing closer.
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