Riksbank: Early-2027 hike view – Nomura

Nomura’s European Economics team, led by Josie Anderson, George Buckley and Andrzej Szczepaniak, reviews the latest Riksbank decision to keep the policy rate at 1.75%. They highlight the Bank’s unchanged economic outlook, growing vigilance over upside inflation risks, and guidance that a rate increase later in 2026 remains possible. Nomura now expects CPIF ex-energy inflation to overshoot and a policy rate hike in March 2027.

Nomura shifts hike to March 2027

"The policy rate projection from June reaches 1.82% in Q4 2026, up from 1.77% in the March forecast, and rises to 2.00% in Q4 2027."

"Its guidance was that “the probability of a rate increase later this year remains”. However, recent inflation surprises (Figure 2) have made it more vigilant to upside inflation risks, despite the low headline rate of CPIF inflation."

"Our expectation is for CPIF ex-energy inflation to increase at a slightly faster pace than in the Riksbank’s latest forecast and average 1.2% y-o-y in Q1 2027 before accelerating to 2.4% in Q2 2027, as the base effects from the April 2026 halving of food VAT push up y-o-y inflation."

"Although Riksbank policymakers will continue to look through the effects of temporary tax and fiscal measures, we think the prospect of above-target inflation may add to reasoning to raise the policy rate, particularly if economic growth continues to be robust."

"We maintain our expectation of no change in the policy rate this year. As headline inflation remains so low, we do not think policymakers will be in a rush to remove policy accommodation."

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