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.
A move next week cannot be fully ruled out, but with only 5bp priced and August inflation broadly benign, the case for immediate action remains weak. That said, the medium-term inflation outlook points in the other direction. Rising price pressures in the coming quarters, external factors and a weaker krona could encourage the Riksbank to act pre-emptively, particularly given the resilience of growth, paving the way for a hike in November.
The main caveat is the situation in the Gulf, but following this meeting, a decline in oil prices would need to be much larger to persuade the Riksbank to forgo an autumn hike. Rate projections to send hawkish message We expect the rate projections to be revised higher to fully reflect a year-end hike, implying a 4Q average policy rate of around 1.88%. We also expect the timing of subsequent hikes to be brought forward, lifting the average 1Q 2027 policy rate from 1.89% to around 2.05%, before reaching 2.2-2.4% in the second half of 2027.
While this would still fall short of market pricing for rates to reach 3.0% by end-2027, it would represent enough of a mark-to-market adjustment to support front-end SEK rates. Higher rates to lend some support to the krona We think a hawkish message next week will consolidate expectations for a November move (now 22bp priced in) and could fuel speculation about back-to-back hikes. Over the past two weeks, both the euro and the dollar have received support from their respective central banks.
Next week, we think it will be the krona’s turn. Still, SEK cannot be viewed through the Riksbank lens alone. EUR/SEK has been driven higher by elevated oil prices, weaker risk sentiment and a hawkish ECB.
The Riksbank can counter the latter by narrowing the gap with ECB pricing, but lower oil prices are still required to drive a sustained move lower in EUR/SEK. We have also revised our ECB and Fed forecasts to include one additional hike by year-end from each. As a result, the floor has been set higher for EUR/SEK, both directly through the ECB and indirectly through the Fed via risk sentiment and liquidity conditions.
Our baseline remains for oil prices to decline sharply from 4Q, leaving our EUR/SEK profile downward sloping. That said, we have raised our forecast path over the coming quarters and now see EUR/SEK at 11.10 by year-end. In the near term, another leg higher in oil prices and risk sentiment jitters could lift EUR/SEK back to 11.40-11.50, its highest level since February 2025, even if the Riksbank prepares for a November hike.
A lot of media attention has focused on the very close result in the Swedish election this month. Political events tend to be a very marginal driver for SEK and while difficult coalition talks may continue to attract attention, we cannot see or forecast any meaningful impact on markets. Our new EUR/SEK forecasts Source: ING "> Source: ING Sweden central bank SEK Riksbank Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives.
The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Author Francesco Pesole FX Strategist Francesco is an FX Strategist and has been with the firm since May 2019. His main focus is on the G10 space and, in particular, on European and commodity currencies.
He began his career at Credit… In this article Inflation muted, but should rise Strong growth in 2Q, slower in 3Q No urgency now, but November hike on the cards Rate projections to send hawkish message Higher rates to lend some support to the krona
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