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Nordea economists Kjetil Olsen and Sara Midtgaard have revised their outlook for the Riksbank, Sweden’s central bank, predicting the policy rate will remain unchanged at 1.75% during the March 19 meeting and throughout 2026. This projection is based on modest inflation forecasts and heightened uncertainty surrounding energy prices, particularly amid ongoing geopolitical tensions. The analysts note that while inflation is expected to decline gradually, risks from war-related disruptions and energy market volatility could delay any rate cuts. The Riksbank’s cautious stance reflects a broader trend among central banks to prioritize stability over aggressive monetary tightening in 2024. For forex markets, the prolonged rate hold could stabilize the Swedish krona (SEK) against major currencies like the euro and dollar. Traders may focus on inflation data and energy price movements as key indicators of future policy shifts. The lack of rate hikes also reduces the appeal of SEK-denominated assets, potentially affecting cross-currency flows. Additionally, the Riksbank’s decision aligns with the European Central Bank’s dovish posture, reinforcing a coordinated approach to managing inflation in the region. Looking ahead, investors should monitor Riksbank’s quarterly inflation forecasts and energy market developments. A significant drop in energy prices or a resolution of geopolitical conflicts could prompt a policy pivot. For now, the central bank’s patience underscores the complexity of balancing inflation control with economic growth in a fragile global environment.
