Swedish Krona: Riksbank caution weighs on Krona – BBH

Brown Brothers Harriman (BBH) expects the Riksbank to keep its policy rate at 1.75% for a sixth consecutive meeting and to lean against market pricing for a 25 bps hike by year-end. With benign inflation and spare capacity, the updated forecast is likely to signal an extended hold, which the bank sees as a headwind for the Swedish Krona.

Extended Riksbank hold pressures SEK

"The Riksbank is widely expected to keep the policy rate at 1.75% for a sixth consecutive meeting (Thursday). We expect the Riksbank to lean against market pricing for a 25bps hike by year-end which is a headwind for SEK."

"The updated Riksbank forecast is likely to continue signaling no change in rates through Q4 2026, though it may bring forward the first full 25bps hike to late 2027 from Q1 2028. Sweden’s benign inflation backdrop alongside ample spare capacity in the economy argue for an extended Riksbank hold."