Sweden's Central Bank Latest to Lift Rates in Response to War

By Paul Hannon

Sweden's central bank on Wednesday raised its key interest rate for the first time since the start of the war between the U.S. and Iran, and signaled that further increases in borrowing costs are likely.

The Riksbank lifted its key rate to 2% from 1.75%, a move that was expected by investors having been flagged by policymakers after their last gathering. It was the first increase in more than three years.

The Riksbank joins a growing number of central banks that have responded to the jump in energy prices since the start of the war by tightening policy. The Federal Reserve, the European Central Bank and the Bank of Japan have each raised their key rates at least once, and the Bank of England is expected to make its first move Thursday.

Swedish policymakers said their first rate rise is unlikely to be their last.

"If the inflation and economic outlook holds, it is likely that the policy rate will be raised further in the coming year," they said in a statement.

Swedish inflation remains low by international standards. The country is less reliant on imported fossil fuels than most of Europe, while taxes on transport and food have been lowered in response to the war. The economy has also shown unexpected resilience thanks to increased consumer spending, business investment and exports.

However, the longer the war and higher energy prices last, the more likely it is that inflation will pick up. The Riksbank said it expects the inflation rate to rise above its 2% target next year.

Write to Paul Hannon at paul.hannon@wsj.com

(END) Dow Jones Newswires

November 04, 2026 03:59 ET (08:59 GMT)