The Riksbank has decided to keep interest rates steady, but meeting minutes show Jansson is considering a cut and might hold back his vote in March. Flash CPIF core inflation has dropped to 1.7% year-on-year, which defies expectations and puts pressure on short-term rates. However, strong economic conditions suggest a rate cut is not coming soon. Although the decision was unanimous, Jansson hinted at the possibility of a reservation or rate cut. Thedéen mentioned that the Riksbank should not react to short-term inflation changes. He noted that both inflation and economic performance would need to fall below expectations for a cut to happen. Recent inflation figures came in lower than expected: CPI is at 0.4% year-on-year, CPIF at 2.0%, and CPIF excluding energy at 1.7%. These numbers could increase pressure, especially after Jansson’s comments. This article includes insights from the FXStreet Insights Team, which gathers market observations from many analysts. It features commercial notes and other insights, all reviewed by an editor. With core inflation at 1.7%, significantly below the Riksbank’s target, there is a clear divide among board members. Jansson is signaling a potential push for a rate cut as soon as March, creating an opportunity for traders who are betting on lower short-term Swedish interest rates. Traders should consider positioning themselves for a more dovish Riksbank than what the market expects. This might involve receiving the fixed side on short-end interest rate swaps, anticipating a decrease in future rate expectations. The recent data adds significant downward pressure on the short end of the curve. This surprising drop in inflation also impacts the Swedish Krona, which could weaken if the Riksbank cuts rates before the ECB does. We are considering long EUR/SEK positions, possibly using call options to minimize downside risk. The uncertainty from the divided board could also lead to increased volatility, making options strategies more attractive. Reflecting on recent data, Sweden’s GDP growth surprised many by staying strong in the last quarter of 2025, growing by 0.7%. However, inflation has been steadily decreasing since last summer. Official reports show that CPIF excluding energy fell from over 4% in mid-2025 to the current level. This significant drop in inflation likely weighs more heavily on doves like Jansson than the robust growth figures. History shows that the Riksbank can act decisively if it fears missing its inflation target on the downside. For example, following 2014, they cut rates deeply into negative territory to counter deflation. If the next inflation readings confirm this downward trend, the board’s determination to keep rates steady could easily waver. The main focus now is the upcoming March meeting. Any derivative positions should be planned with this event in mind, as Jansson’s possible dissent could lead to significant market changes. We will closely monitor labor market and wage data for signs of economic weakness that could sway the decision toward a rate cut.

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