Sweden’s central bank may adjust policy rate after major banks raise mortgage rates

Sweden’s central bank could revise its interest rate plans following recent mortgage rate hikes by major banks, despite no change to the policy rate, SVT Nyheter reports.

Several large banks have increased variable mortgage rates even though the Riksbank has not raised its key policy rate, which currently stands at 1.75 percent. Deputy Governor Per Jansson told SVT that these moves will factor into the bank’s next forecast.

“This may influence how we decide on the future path of the policy rate,” Jansson said. He noted that while the Riksbank’s decisions typically guide market rates, the reverse can also occur: “It’s a two-way interaction—many things affect us, and what we do affects others.”

The Riksbank’s current baseline scenario, set during its March 19 meeting, projected a rate hike only by late 2027. However, market expectations now anticipate three increases this year. The next rate announcement is scheduled for May 7.

Jansson explained that the banks’ independent rate hikes affect the broader interest rate environment, which underpins the Riksbank’s economic and inflation forecasts. “This could ultimately impact our own rate projections,” he said.

Economic commentator Alexander Norén interpreted the Riksbank’s stance as a signal that commercial banks may have “preemptively” raised rates, potentially reducing the need for the central bank to implement as steep an increase later. “What he’s saying, in plain terms, is that since borrowing costs are already rising due to the banks’ actions, they may not need to hike as much as they otherwise would have,” Norén said during SVT’s live broadcast.