Sweden’s central bank, the Riksbank, has decided to hold its key interest rate steady at 2.25%, opting for a cautious approach as inflation proves stickier than expected and global trade tensions escalate. The move marks a pause following six rate cuts since spring 2024, with the most recent reduction taking place in January.
Governor Erik Thedéen acknowledged that economic forecasts have become increasingly uncertain but expressed confidence in Sweden’s longer-term outlook. He pointed to the possibility of new U.S. tariffs on European Union imports as a major external risk. Such measures, if enacted, could disrupt Swedish exports and add volatility to the country’s growth trajectory.
Although previous rate cuts were aimed at supporting domestic demand, inflation has remained above the Riksbank’s 2% target. Deputy Governor Per Jansson noted that while inflation had climbed more than expected since the last policy meeting, the rise is likely to be temporary. He emphasized that rate adjustments would only be considered if the central bank’s credibility in managing inflation were at risk.
Looking ahead, the Riksbank’s next interest rate decision is scheduled for May 8, with flash inflation data for March expected on April 4. In the meantime, policymakers are closely monitoring price trends and external developments, particularly those that could threaten the inflation outlook or financial stability.
The decision to hold rates underscores the Riksbank’s focus on balancing its dual mandate: maintaining price stability while supporting sustainable economic growth. With external pressures mounting and inflation still hovering above target, Sweden’s central bank appears to be taking a wait-and-see approach in a highly uncertain global environment.
