The Riksbank’s November 5, 2025 Interest Rate Decision kept the repo rate unchanged at 1.75%, consistent with the prior reading from September 23, 2025. This marks the third consecutive hold after a series of cuts from a peak of 2.25% in March and May 2025. The decision aligns with the central bank’s cautious stance amid moderating inflation and mixed economic signals.

Drivers this month

• Inflation eased to 3.10% YoY in October from 3.50% in August, but core inflation remains elevated at 2.80% YoY.
• GDP growth slowed to 0.30% QoQ in Q3 2025, down from 0.60% in Q2, reflecting weaker domestic demand.
• Unemployment steady at 6.50%, near the 12-month average of 6.40%.

Policy pulse

The 1.75% rate sits below the 2025 peak of 2.25%, reflecting a pivot from tightening to a neutral stance. The Riksbank signals readiness to adjust if inflation deviates from the 2% target, but current data supports a pause.

Market lens

Immediate reaction: SEK/USD held steady post-announcement, while 2-year government bond yields declined 5 bps, indicating market relief at no surprise hike.

Core macroeconomic indicators reveal a mixed but stabilizing Swedish economy. Inflation, the primary driver of monetary policy, has moderated from early 2025 highs but remains above target. GDP growth has slowed, and labor market conditions are stable but not robust.

Inflation trends

Consumer Price Index (CPI) inflation declined to 3.10% YoY in October 2025, down from 3.50% in August and well below the 4.20% peak in March 2025. Core inflation, excluding volatile food and energy, remains sticky at 2.80% YoY, signaling persistent underlying price pressures.

Growth and employment

GDP expanded by 0.30% QoQ in Q3 2025, a slowdown from 0.60% in Q2 and below the 0.50% average for the past year. Unemployment held steady at 6.50%, close to the 12-month average of 6.40%, indicating a balanced but cautious labor market.

Fiscal policy & budget

Government fiscal policy remains moderately expansionary, with a budget deficit of 1.20% of GDP projected for 2025, slightly wider than the 1.00% deficit in 2024. Increased social spending and infrastructure investments support domestic demand but limit fiscal space.

Drivers this month

• Inflation deceleration from 4.20% in March to 3.10% in October.
• GDP growth slowing from 0.60% QoQ in Q2 to 0.30% in Q3.
• Stable unemployment around 6.50%.

Policy pulse

The Riksbank’s decision to hold rates reflects a balance between cooling inflation and supporting growth. The current rate is below the 2.25% peak but above the 1.50% level seen in late 2024, indicating a mid-cycle pause.

Market lens

Immediate reaction: SEK/USD remained stable, while 2-year yields dropped 5 basis points, signaling market confidence in the pause. Breakeven inflation rates edged lower, reflecting eased inflation expectations.

Looking ahead, the Riksbank faces a complex environment. Inflation is easing but remains above target, growth is slowing, and external risks loom. The central bank’s forward guidance suggests flexibility, with scenarios ranging from further cuts to renewed hikes depending on incoming data.

Bullish scenario (20% probability)

• Inflation falls rapidly below 2% by mid-2026.
• GDP growth rebounds above 0.50% QoQ.
• Riksbank cuts rates to 1.25% by Q3 2026 to support growth.

Base scenario (60% probability)

• Inflation gradually approaches 2% by late 2026.
• GDP growth remains modest at 0.20–0.40% QoQ.
• Rates remain at 1.75% through 2026 with possible minor adjustments.

Bearish scenario (20% probability)

• Core inflation remains sticky above 3%.
• External shocks (e.g., geopolitical tensions) dampen growth.
• Riksbank hikes rates back toward 2.00% to combat inflation risks.

The November 2025 Interest Rate Decision underscores the Riksbank’s cautious balancing act. With inflation easing but still above target, and growth slowing, the central bank opts for stability. External risks and fiscal policy dynamics add layers of complexity. Market participants should monitor inflation trends, geopolitical developments, and fiscal signals closely for clues on the next policy moves.

Key Markets Likely to React to Interest Rate Decision

The Riksbank’s decision directly influences Swedish krona liquidity, bond yields, and equity valuations. The following tradable symbols historically track interest rate shifts and macro sentiment in Sweden:

• ERIC-B.ST – Ericsson’s stock price is sensitive to domestic economic conditions and interest rate changes.
• SEKUSD – The Swedish krona to US dollar pair reacts swiftly to Riksbank policy signals.
• BTCUSD – Bitcoin’s price often reflects risk sentiment shifts triggered by monetary policy.
• ATCO-A.ST – Atlas Copco’s shares correlate with industrial activity and interest rate trends.
• EURSEK – Euro to Swedish krona exchange rate is a key barometer of cross-border capital flows impacted by rate decisions.

FAQs

What is the significance of Sweden’s 1.75% interest rate?

The 1.75% rate reflects the Riksbank’s current monetary policy stance aimed at balancing inflation control with economic growth.

How does the interest rate decision impact the Swedish krona?

Interest rate changes influence capital flows and currency valuation; a steady rate tends to stabilize the krona against major currencies.

What are the risks to Sweden’s monetary outlook?

Risks include persistent inflation above target, geopolitical shocks, and slower global growth affecting exports and domestic demand.

Key takeaway: The Riksbank’s steady 1.75% rate signals a cautious pause amid easing inflation and slowing growth, with flexibility to adjust as risks evolve.