Riksbank Preview: Time To Check In

Research evidence excerpt

Riksbank Preview: Time To Check In

IdeaM

No room for complacency

Bottom line | Hold in June: We expect Riksbank to remain on hold on at its June meeting.

The Riksbank is in full wait-and-see mode (see Bunge or Hjelm), aided by the good starting

point of the economy and fiscal policies. It can afford to wait for more clarity and does not

need to act next week, like the ECB did yesterday. Spot inflation surprised to the

downside, economic activity in 1Q26 came in weaker than expected and inflation

expectations remain anchored. The government also announced multiple fiscal measures

in response to the high energy prices, which will lower inflation in the months ahead. Yet,

forward looking indicators continue to point towards building inflationary pressures and

the uncertainty remains high. The statement will likely reiterate the good starting point of

the Riksbank, but underline the increased vigilance and readiness to adjust monetary

policy if warranted. Therefore while on a hold, we think the forward guidance will provide

more food for thought.

Policy rate path: The balance of risks has moved to the upside for the inflation outlook,

and we think this will be reflected both in the statement and the revised policy rate path.

We expect the new policy rate path to include a possibility of a rate hike already in 3Q26,

and price in slightly more than what is now being priced in for 4Q26. Indicators of

inflationary pressures within surveys have risen, the currency has depreciated slightly

more than expected, and energy prices moved further up from those in the March MPR.

All Board members broadly agreed in the May meeting that risks of higher inflation have

somewhat increased and that the favourable inflationary conditions could quickly become

a thing of the past (see Minutes).