On Wednesday, the Riksbank kept its key interest rate at 1.75% and does not expect to change it soon. Preliminary data shows that growth in the third quarter was stronger than anticipated. Even with some progress, Sweden’s labor market is still struggling. However, there are signs that it might improve. Projections for inflation and economic activity remain mostly the same, and risks have been stable since September.

The Riksbank Strategy

The Riksbank intends to maintain the policy rate at 1.75% until future economic developments unfold. New forecasts will be released in December, providing detailed insights and explanations. The Riksbank is prepared to adjust if unexpected changes happen but plans to stay on its current course for now. The outcome of this meeting had a neutral impact on the Swedish Krona (SEK). The FXStreet Insights Team gathers market observations from experts, merging commercial notes with analysts’ insights. The Riksbank’s choice to keep the key interest rate at 1.75% supports our belief in a stable period for the Swedish Krona. The central bank has indicated it is pausing, removing immediate triggers for large price changes. This suggests that implied volatility in SEK currency pairs is likely to decrease in the coming weeks.

Economic Overview

We see support for this stability in the latest economic data from October 2025, which revealed that overall inflation eased to 2.2%, close to the bank’s target. Although the preliminary Q3 2025 GDP grew by +0.4%, the overall economy remains delicate. This mixed outlook confirms the Riksbank’s cautious wait-and-see strategy until at least December. For derivative traders, this situation favors strategies that benefit from low volatility and time decay. Selling options on currency pairs like EUR/SEK could be a good approach, as we do not expect large movements. Setting up range-bound trades, such as iron condors, allows for profit as long as the Krona stays within a stable range. Looking back, the Krona has found stability after the more turbulent times we saw in 2024. We predict that EUR/SEK will stay mostly between 11.40 and 11.70 throughout November. If it approaches the limits of this range, it offers an opportunity to sell volatility with strikes positioned outside these boundaries. The main risk to this outlook is an external shock, especially regarding energy prices as winter approaches in Europe. We are also closely watching the weak labor market, with the unemployment rate for October 2025 remaining high at 7.8%. Any significant changes in these factors could lead the Riksbank to take action sooner than expected. Create your live VT Markets account and start trading now.

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