Swedish central bank leaves policy rate unchanged as markets watch Norway's upcoming decision

Riksbanken confirmed that its policy rate will remain at the same level that has been unchanged since September of the previous year. The decision matched expectations from a poll of economists, shifting attention to the bank’s commentary on upcoming monetary policy. Meanwhile, Norges Bank is scheduled to release its rate decision at 10 a.m., a meeting that has generated considerable anticipation among market participants.

Analysts are divided on whether Norway will raise rates or keep them steady, reflecting divergent views on inflation pressures. The gap between Swedish and Norwegian rates is largely attributed to stronger wage growth, better economic expansion, and a tighter labor market in Norway, according to chief economist Kjersti Haugland. Additional factors such as tax cuts on food and fuel, as well as lower public-transport fares, have helped keep Swedish price growth low, noted Lars Kristian Feste. Riksbanken’s inflation target measure has stayed at or below its goal, and its vice-governor Per Jansson warned of a modest rise in inflation risks while noting the Swedish labor market remains relatively weak.