Riksbank: How is accelerating inflation pushing the policy path higher? – Nomura

Further Riksbank tightening is expected by Nomura’s Global Markets Research team following the latest decision to lift the policy rate to 2.00%. Led by Josie Anderson, George Buckley and Andrzej Szczepaniak, the team points to resilient GDP growth, elevated energy prices and accelerating CPIF inflation after excluding temporary fiscal measures as the main drivers. Its analysts anticipate two additional 25bp increases, in February and May 2027, bringing the rate to 2.50%.

Why Does Nomura Expect Further Riksbank Tightening?

"Guidance on future changes in the policy rate was that “if the outlook for inflation and economic activity holds, the Riksbank assesses that it is likely that the policy rate will be raised further in the coming year, in line with the policy rate forecast in September.”"

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"We expect CPIF inflation to average 1.8% y-o-y in Q1 2027 before accelerating to 2.6% in Q2 2027, as the base effects from the April 2026 halving of food VAT push up y-o-y inflation."

"The policy rate projection from September implies around a 50% probability of a February 25bp hike, assuming no change in the policy rate in December. The projection then gradually increases over 2027 to a peak of 2.43% in Q1 2028."

"We expect the Riksbank to raise its policy rate by 25bp again in February and May 2027, taking the policy rate to 2.50%, which is still within the range that the Riksbank views as neutral (1.50-3.00%). This would also be fewer hikes than we expect from the ECB in 2026 and 2027 (we expect a total of four hikes to 3.00% – including the two that have already been implemented)."

"We think there are risks to the timing of our Riksbank hiking view – the next two hikes after November could come in March and June (i.e. one month later than we think), when the Riksbank can assess inflation pressures more thoroughly in its forecast rounds.Back-to-back hikes in November and December 2026 seem unlikely with inflation still looking broadly under control."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Learn more.)