ING expects the Riksbank to keep interest rates unchanged through 2026, even if inflation dips to around 1%. It ties this view to stronger growth and earlier policy easing, which reduce the need for further cuts.
CPIF inflation is forecast to fall to a low of 1.0% in 3Q26, mainly due to VAT cuts. ING also expects inflation to move back toward 2.0% in 2027.
Market Pricing And Rate Cut Expectations
Softer recent inflation data and a dovish comment from Per Jansson have revived speculation about another cut. Markets are pricing about 15bp of easing by June. ING expects this to be priced out again, which could support the Swedish krona.
Even if policy stays steady, Swedish yields below 2% keep the krona near the bottom of the G10 carry range. From 2015 to 2017, EUR-SEK two-year swap spreads were often similar to, or wider than, today’s levels, while EUR/SEK mostly traded between 9.00 and 10.00.
ING expects the Riksbank to hold rates throughout 2026. This steady policy stance should support the krona. Sweden’s GDP grew 0.5% in the last quarter of 2025, beating expectations and giving the central bank little reason to cut rates further. That should make traders rethink bets on more easing.
Inflation may briefly drop to 1% later this year, but this is largely driven by tax changes and is already on the Riksbank’s radar. More recent data, such as January’s CPIF reading of 1.9%, suggests underlying price pressure remains. This supports Governor Thedéen’s neutral message and implies the bank will look past any short-term weakness.
Implications For Sek Positioning
The main near-term opportunity is that markets are still pricing in roughly 15bp of cuts by June, which ING expects will not happen. Derivatives traders may want to position for this pricing to unwind. If it does, short-term Swedish rates should rise and the SEK may strengthen. One way to express this view is through options that benefit from a lower EUR/SEK or USD/SEK over the coming months.
The krona’s sub-2% yield makes it less appealing for simple carry trades, but that may not matter much. In 2015–2017, rate gaps were similar, yet EUR/SEK traded much lower, often between 9.00 and 10.00. This suggests a stable policy outlook can support SEK gains even when yields are low.
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