UBS sees Riksbank raising rates by 25 basis points

UBS expects Sweden’s central bank to increase its policy rate by 25 basis points to 2.0% at its meeting next week. The move has been clearly signaled by the Riksbank and markets have largely priced in the increase, with 22 basis points already reflected.

Following the expected rate hike, UBS anticipates the Riksbank will pause at its December meeting before raising rates again to 2.25% in the first quarter of 2027.

This would return the policy rate to a neutral stance as growth recovers and the output gap closes, making an accommodative policy stance unnecessary.

UBS does not currently see a need for the Riksbank to move into restrictive territory, assuming the growth recovery remains on track and the currency does not weaken significantly beyond expectations.

Geopolitical events and their impact on energy prices could play an important role in determining the policy path ahead, according to UBS.

If other central banks including the European Central Bank, Federal Reserve and Norges Bank continue tightening policy throughout 2027, the Riksbank may need to raise its policy rate further as well.