Sweden's monetary policy 2025
Rapport från riksdagen 2025/26:RFR17
Reports from the Riksdag 2025/26:RFR17
The Committee on Finance
Sweden’s monetary policy 2025
Martin B Holm, Karin Kinnerud and Roine Vestman
Sweden’s monetary policy 2025
Martin B Holm
Oslo University
Karin Kinnerud
BI Norwegian Business School in Oslo
Roine Vestman
Stockholm University
May 2026
Center for Monetary Policy and Financial Stability (CeMoF)
Stockholm University
ISSN 1653-0942
ISBN 978-91-7915-215-4 (printed version) ISBN 978-91-7915-216-1 (PDF)
Printed by: The Riksdag Printing Office, Stockholm 2026
2025/26:RFR17
Foreword by the Committee on Finance
The Committee on Finance has tasked the Center for Monetary Policy and Financial Stability (CeMoF) at Stockholm University with evaluating monetary policy with a focus on the most recent calendar year, that is, 2025. The CeMoF has in turn appointed Roine Vestman at Stockholm University, Martin Blomhoff Holm at Oslo University, and Karin Kinnerud at the BI Norwegian Business School in Oslo to carry out the evaluation on behalf of the Committee on Finance. The researchers’ report Sweden’s Monetary Policy 2025 is the fourth of its kind and serves as a basis for the Committee on Finance’s annual evaluation of Sweden’s monetary policy.1
The Riksbank’s strongly independent status is laid down in the Constitution of Sweden. This places great demands on the democratic scrutiny of the Riksbank, and the Committee on Finance has an important role to play here. Ac- cording to the Riksdag Act, the Committee on Finance shall follow up and evaluate the activities of the Riksbank regarding the fulfilment of its objectives and its efficiency. This applies particularly to monetary policy, as price stability is the overall objective for the Riksbank.
Since the mid 00s, the Committee on Finance has commissioned independent, more long-term evaluations of Sweden’s monetary policy approximately every five years. For the purpose of these evaluations, the Committee on Fi- nance has appointed international researchers and former governors of central banks. So far, five such evaluations of monetary policy have been carried out.2
The Committee on Finance hopes that the current report focusing on monetary policy in 2025 will further stimulate public debate on Swedish monetary policy. The authors are personally responsible for the content and conclusions of the report.
Stockholm, May 2026
| Edward Riedl (Moderate Party) | Mikael Damberg (Social Democratic Party) |
| Chair of the Committee on Finance | Deputy Chair of the Committee on Finance |
Mikael Åsell
Head of Secretariat
1See list of previous reports in Annexe 1.
2See list of previous long-term evaluations in Annexe 2.
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Tabel of contents
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Foreword by the authors
This is the fourth report on Sweden’s monetary policy written by the Center for Monetary Policy and Financial Stability (CeMoF). The assignment from the Committee on Finance is as before: to evaluate the Riksbank’s monetary policy during the previous year, and more specifically comment on the fulfilment of objectives and weighing up of monetary policy decisions. We hope that the report can both contribute to the discussion on monetary policy and increase understanding of the Riksbank’s role in the economy.
This year’s report is written by Martin Blomhoff at Oslo University, Karin Kinnerud at the BI Norwegian Business School in Oslo, and myself. We especially want to thank the doctoral students on the Monetary Economics course at Stockholm University who discussed monetary policy at a seminar, Göran Hjelm in his role at the time as Head of the Swedish Fiscal Policy Council and last but not least, all the employees at the Riksbank who have helped to produce data and answer questions of a factual nature. Iida Häkkinen Skans and Björn Lagerwall at the Riksbank checked the factual content of a draft of the report.
We are personally responsible for the content of the report, and the conclusions do not necessarily represent the views of other researchers connected with CeMoF.
Stockholm April 2026
Roine Vestman
Professor, Department of Economics, Stockholm University
Head of CeMoF
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1Summary
Background and assignment
This report evaluates the Riksbank’s monetary policy in 2025. Our task is to assess whether the Riksbank’s measures can be assumed to have led to the intended results, whether the measures have been more far-reaching than necessary and whether the results have been in reasonable proportion to the costs and risks that the various measures have entailed. In addition to this overall evaluation, we have conducted an in-depth examination this year of how the Riksbank analysed the macroeconomic effects of the 2026 Budget Bill.
Macroeconomic developments in 2025
Two circumstances distinguished the Swedish economy in 2025. Firstly, inflation was above the inflation target for much of the year: CPIF (consumer price index with a fixed interest rate) inflation amounted to 2.6 per cent on average for 2025 (compared to 1.9 per cent in 2024), while CPIF excluding energy amounted to 2.8 per cent. Inflation was especially high during the summer, before falling back towards target in the autumn. In December 2025, CPIF inflation was 2.1 per cent and CPIF excluding energy was 2.3 per cent.
Secondly, economic recovery was weaker and slower than expected. GDP growth admittedly reached 1.5 per cent for 2025, which is an improvement compared to 0.9 per cent for 2024, but it was clearly lower than the Riksbank’s previous forecasts. There was a further weakening of the labour market during the year, and unemployment rose to 8.8 per cent during the third quarter. The rise was primarily explained by the fact that the labour force grew more rapidly than employment. During the fourth quarter, there were increasing signs that recovery was under way, and the previous GDP outcome was revised upwards.
Monetary policy 2025
The Riksbank lowered the policy rate on three occasions during the year – in January, June and September – from 2.50 per cent at the start of the year to
1.75per cent at the end of the year. On the five other occasions, the policy rate was left unchanged. The decisions were characterised by three overarching factors: i) the rise in inflation at the start of the year was primarily assessed to be temporary and driven by technical effects as well as specific price movements, rather than being broadly demand driven; ii) the real economy continued to be weak, in particular in the labour market; and iii) international uncertainty increased markedly, primarily as a result of US trade policy and geopolitical tensions. The Executive Board successively became more convinced that inflation would fall back and that recovery was under way. In connection with the monetary policy decision in September, there was disagreement
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within the Executive Board of the Riksbank, based primarily on the risk of a vulnerable supply side combined with an unexpectedly strong demand.
Fulfilment of objectives
Our assessment is that fulfilment of objectives was good in 2025. Inflation was admittedly above target seen across the whole year but fell clearly towards target in the second half of the year. The Riksbank’s assessment that the rise in inflation mainly depended on temporary factors appears to have been correct.
The long-term inflation expectations were well-anchored around the inflation target. According to the Riksbank’s survey of expectations, the median for expected inflation in a five-year perspective was 2.0 per cent in all groups (social partners, purchasing managers and monetary market actors), with moderate spread. This is perhaps the single most important indicator that the monetary policy framework is perceived as credible, which cannot be taken for granted.
Was monetary policy well considered?
Our overall assessment is that monetary policy in 2025 was well considered. A successively more expansionary monetary policy appears reasonable given the need to support recovery in the economy while inflation expectations remained stable. The Riksbank found itself in a complicated situation with a certain conflict of goals: inflation was persistently above target at the same time as resource utilisation was low. The Riksbank chose to interpret the higher inflation as driven by temporary factors and lowered the policy rate on three occasions. The fact that the decisions at several of the meetings were not obvious indicates that a different decision on the policy rate on a single occasion would probably have had small socioeconomic costs.
The Budget Bill for 2026 and analytical capacity
We have particularly examined how the Riksbank analysed the 2026 Budget Bill, which involved a more expansionary fiscal policy than forecast in June, with expenditure increases and tax reductions of approximately SEK 79 billion in 2026 (91 billion including defence expenditure). Our assessment is that the Riksbank’s approach – using previous estimates of fiscal multipliers – was reasonable, as neither the MAJA model nor the BVAR model is well suited for detailed fiscal policy analysis. The upward revision of the GDP forecast for 2026 by 0.2 percentage points appears to have been a cautious but reasonable assessment.
However, we have two objections. Firstly, the scenario analysis seems to have been weak. In the monetary policy group, a positive demand shock was analysed, but not a negative supply shock, which feels like a missed
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| opportunity in view of the disagreement within the Executive Board. Involving | |
| the Executive Board in the design of scenarios from an early stage might help | |
| to clarify where assessments differ, which could be of value for both internal | |
| analysis and external communication. | |
| Secondly, we would have liked to see a robustness analysis. The single | |
| greatest change between the June and September assessments concerned the | |
| item indirect taxes, where the multiplier that was used (0.35) is more consistent | |
| with the National Institute of Economic Research’s (KI’s) Selma model than | |
| with many empirical estimates. A higher, but nevertheless reasonable multi- | |
| plier would have produced a significantly different forecast. Given the notable | |
| uncertainty regarding fiscal multipliers, a robustness test would have been jus- | |
| tifiable. |
The Riksbank’s view of the exchange rate
We have a further objection regarding the Riksbank’s view of the value of the Swedish krona. The Swedish krona was strengthened in 2025 in line with the Riksbank’s forecasts. Seen in a more long-term perspective, however, a systematic pattern emerges: at least since 2013, the Riksbank has expected a strengthening of the krona while the trend has been a weakening. The basic problem is that existing models cannot reliably predict the development of the exchange rate. Our perception is that the Riksbank could gain confidence by adopting a more neutral stance to the development of the krona.
Conclusions
In summary, 2025 was a year when the Riksbank had to deal with a complex and in part contradictory economic outlook. The framework functioned as it should, long-term inflation expectations remained anchored, and monetary policy contributed to Sweden’s economic recovery. The areas of improvement that we point out – scenario analysis, robustness analysis of fiscal policy effects and exchange rate assessments – should be regarded as marginal adjustments rather than fundamental criticisms.
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2Introduction
The purpose of this report is to evaluate the Riksbank’s monetary policy in 2025, and the extent to which the bank achieved the objective of price stability and contributed to a balanced development of output and employment. More specifically, the task includes assessing whether: i) the Riksbank’s measures can be assumed to have led to the intended results; ii) the measures have not been more far-reaching than necessary; and iii) the intended results have been in reasonable proportion to the costs and risks that each measure has entailed for the Riksbank’s and central government finances.
Our analysis can be regarded as an applied research report based on the Riksbank’s decisions and communication connected to these, as well as a general economic analysis. We have specifically studied the Riksbank’s own accounts of the policy it has pursued in the form of records of monetary policy meetings, reports and updates in connection with decisions, and the Riksbank’s Account of Monetary Policy 2025 (the Riksbank, 2026). We have furthermore studied documentation from the internal drafting meetings held at the Monetary Policy Department prior to the decisions. In addition, we have used external material, mainly the National Institute of Economic Research’s (KI) economic activity forecasts in 2025.
The report has the following structure. Section 3 gives the background and describes the theory and empirical data of particular relevance for monetary policy in 2025. In Section 4, macroeconomic developments during the year are presented, where we specifically focus on events with a bearing on our evaluation. The monetary policy pursued is then summarised in Section 5, after which our evaluation is presented in Section 6. Section 7 wraps up with our overall conclusions.
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3 Background: The Riksbank’s tasks, theory and empirical data
This section provides an overview of the Riksbank’s conditions and of current research on monetary policy. In addition to a brief summary of various monetary policy tools, our emphasis has been on a review of stabilisation policy, coordination between fiscal policy and monetary policy, and the effects of fiscal policy on economic activity and inflation.
3.1 The conditions and tools of monetary policy
This section describes the conditions, objectives and tools of monetary policy.
The inflation target, inflation and utilisation of resources
The Riksbank and most other central banks with the task of conducting an independent monetary policy have an inflation target of 2 per cent. In order to steer inflation towards the inflation target, the central bank needs to have an overview of whether utilisation of resources in the economy is higher or lower than the potential level that would be compatible with a stable inflation in line with the inflation target. Examples of measurements of utilisation of resources include the GDP gap, employment gap and unemployment gap. These measurements show the current situation in relation to the potential of the economy. The Phillips curve shows how much inflation changes when GDP deviates from the potential output of the economy. When the GDP gap is positive, this means that companies tend to increase prices more than is compatible with the inflation target. The opposite applies when the GDP gap is negative.
Inflation expectations
One of the Riksbank’s central objectives is to keep inflation expectations anchored around the inflation target. The inflation process contains elements of self-fulfilling mechanisms: if wage earners and companies expect higher inflation, salaries and prices tend to be set accordingly, which can lead to an actual rise in inflation, without any growth in the real economy.3
If the long-term inflation expectations exceed the target, vigorous tightening may be required in order to restore price stability, often with the effect of a downturn in the economy and higher unemployment. It is therefore crucial that the more long-term inflation expectations remain close to target, even if inflation temporarily deviates. A credible monetary policy that gives early
3Textbooks often describe the long-term Phillips curve as vertical, that is, that potential GDP is the same regardless of the long-term inflation level.
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signals of how inflation is to stabilise can therefore prevent costly future increases in the interest rate. In practice, however, it is difficult to produce exact models of how expectations are formed and how quickly they change.4 The inflation expectations in 2025 are further analysed in Section 6.
The policy rate
The Riksbank’s foremost tool is the policy rate. The policy rate determines the nominal rate at which commercial banks can borrow and deposit with the Riksbank. When the Riksbank changes the policy rate, this in turn affects the rest of the economy in that the interest rate at which companies and households can invest and save is affected. In this way, the Riksbank can influence demand in the economy. The real interest rate that is compatible with stable inflation around the target and an economy in balance (neither positive nor negative gaps in utilisation of resources) is known as the neutral interest rate. A real interest rate that is higher than the neutral interest rate has a contractionary effect on the economy, and a lower real interest rate has a stimulating effect.
The interest rate path and forward guidance
Expectations regarding future policy rates are central to the way in which monetary policy affects the economy. Companies’ and households’ decisions are affected by expectations regarding interest rates in a more long-term perspective, and not just by the current policy rate. Actual changes in expectations can also affect demand in the economy even when no actual changes to interest rates are made.
Communication from the central bank about future interest rate developments – forward guidance – is therefore an important tool. One way of communicating is by publishing interest rate paths. The Riksbank has published such forecasts since 2007, and in an international perspective, it is one of the more transparent central banks in this regard. Since 2024, the Riksbank has placed special emphasis on the coming nine months, which reflects the horizon identified by the Executive Board as the most relevant in the monetary policy decision-making process.
Quantitative easing
For the past 15 years, the neutral interest rate has been at a historically low level. In this low-interest environment, central banks in many countries, including the Riksbank, have had limited scope to stimulate the economy purely by lowering the interest rate. This is why unconventional monetary policy has been used, primarily in the form of quantitative easing (QE).
4A shortcoming connected with macroeconomic models is that they, as a rule, assume that long-term inflation expectations will be stable, which is a limitation if inflation deviates significantly from target.
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| The first QE programmes mainly meant that central banks purchased gov- | |
| ernment bonds with longer terms to maturity in the secondary market. This | |
| reduced the private sector’s interest rate risk, which was replaced by liquid | |
| assets with the central bank. When the central bank takes over part of the in- | |
| terest rate risk, it is reasonable for the price of this to fall, which tends to reduce | |
| long-term interest rates and thereby stimulate investments and demand. Em- | |
| pirical studies show that such QE programmes have had a certain impact on | |
| interest rates and economic activity, but the impact in normal times is assessed | |
| to be relatively limited and difficult to measure in a longer perspective. In | |
| summary, a reasonable assessment is that inflation became somewhat higher | |
| and unemployment somewhat lower when the Riksbank purchased securities | |
| prior to the pandemic. | |
| Another form of QE programme is the one launched by the Riksbank during | |
| the pandemic. At that time the Riksbank primarily purchased other interest- | |
| bearing securities with the purpose of reducing the risk premiums (that is, low- | |
| ering the interest rate) on, for example, covered bonds. Such QE programmes | |
| have proven to have considerable impact on risk premiums if they are correctly | |
| designed and are initiated at times of great pressure on the financial markets. |
The Riksbank’s balance sheet
The Riksbank uses its balance sheet to implement monetary policy and perform its financial stability tasks. In 2025, the Riksbank continued to shrink its balance sheet. Figure 3.1 illustrates this. At the end of the year, the balance sheet total was SEK 915 billion, which can be compared to the peak value of SEK 1,564 in 2021. Compared to 2014, however, the balance sheet is still large. This depends partly on the gold reserves, which amounted to SEK 161 billion at the end of the year (as recently as 2021, the value was just SEK 67 billion). It also depends on the interest-bearing securities that the Riksbank still owns as a result of its QE programmes. At the end of the year, the value of these holdings was SEK 219 billion. For the first time in many years, however, the foreign currency reserves were once again the largest item at SEK 415 billion.
Figure 3.2 shows the liabilities side of the Riksbank’s balance sheet. The reduction in assets since 2024 is primarily reflected by deposits from the private financial sector (which represents a liability in Swedish kronor). Equity amounted to SEK 23 billion at the end of 2025, but in total, equity and revaluation accounts (which consists of unrealised gains) amounted to SEK 181 billion.
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Figure 3.1 The Riksbank’s assets 2007–2025
Notes: Values from the annual report. SEK billion.
Source: The Riksbank.
Figure 3.2 The Riksbank’s liabilities (2007–2025)
Notes: The item “equity” is the sum of equity, revaluation accounts, provisions and the result for the year. The item “borrowing” refers to loans from the National Debt Office. SEK billion.
Source: The Riksbank.
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3.2The interaction between fiscal and monetary policy and the Swedish framework
Fiscal policy also affects central macroeconomic variables, such as inflation, economic activity and the real costs of the central government debt. In principle, both fiscal policy and monetary policy can be used to stabilise the economy. The interaction between fiscal and monetary policy is therefore important and can take different forms, as we discuss below.
Economic theory distinguishes between monetary policy dominance and fiscal dominance. In the case of monetary policy dominance, the central bank prioritises price stability, while fiscal policy is adapted in order to secure longterm, sustainable public finances. With fiscal dominance, monetary policy is instead adapted to enable funding of public deficits, which risks leading to high inflation. As economic agents are forward-looking, central government finances need to be sustainable in the long term, which means that one or the other type of economic policy needs to dominate.
A well-known policy problem is that a system of explicit monetary policy dominance can glide over into fiscal dominance if the fiscal policy is not perceived as sustainable in the long term. In this case, monetary policy will in the end need to be adapted to ensure funding of fiscal policy, with significant costs to the real economy as a consequence. In order to counteract this, a clear division of labour is required: the central bank should safeguard price stability, and fiscal policy should follow credible rules for expenses and liabilities.
Since 1992, Sweden has had an institutional framework corresponding mainly to monetary policy dominance.5 The Riksbank conducts monetary policy with a 2 per-cent inflation target, while fiscal policy is controlled by rules, for example, on surpluses and indebtedness.
Recently, however, a couple of changes have been introduced. The Riksdag has replaced the surplus target with a balance target as from 2027, and the new Sveriges Riksbank Act from 2023 allows slightly greater scope for real economy considerations. According to Ravn and Wilkens (2026), these changes entail a slight weakening of the strict monetary policy dominance, but the framework is still assessed to include monetary policy dominance and therefore to safeguard long-term price stability.
3.3 Fiscal multipliers and their impact on inflation
In recent years, fiscal policy has been used more actively as a stabilisation policy tool in many countries. For central banks, it therefore becomes more important to understand how fiscal policy affects what is a well-considered monetary policy. If Sweden’s fiscal policy involves a greater deviation from
5In most developed economies, the central banks have a high degree of independence, and monetary policy dominance has long been the norm. At the same time, this arrangement has been challenged in connection with crises, when fiscal policy has had a more prominent role.
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the fiscal policy framework, the demands on the Riksbank to assess the impact of its fiscal policy measures increase.
The key method of measurement in this context is the fiscal multiplier, which measures the impact on GDP of fiscal policy measures. In academic literature, the effect of fiscal stimulus measures is often summarised with this multiplier, defined as the change in GDP divided by the change in the fiscal policy deficit in a given period. In September, for example, the Government presented a Budget Bill containing increased expenditure and tax decreases corresponding to SEK 79 billion (excluding defence expenditure) for 2026. The multiplier shows the effect on GDP, which in turn is important when making inflation forecasts. As the multiplier is so central to monetary policy considerations, we will give a summary of both the theoretical and the empirical literature.
Macroeconomic models
Simple Keynesian models show large multipliers, often above 1. This means that each extra krona in temporary deficit increases GDP temporarily by more than 1 krona. This sizeable effect is due to positive consequences on the economy of public stimulus. At the same time, more modern theories with forwardlooking households indicate that the effects may be significantly smaller if the fact that today’s deficits must be financed in some way is taken into account. Households adapt their savings on the basis of expected future taxes (“Ricardian equivalence”).
Modern macro models of the kind used by the Riksbank (e.g. the MAJA model) position themselves somewhere in between these extremes. They generally indicate that the multiplier is moderate, around 1 or lower in the short term, and even lower in the long term, and are particularly affected by the transparency of the economy. For small, open economies, such as Sweden, the effects are limited by import leakage. In practice, the multiplier also depends on the type of fiscal measure. In both models and empirical studies, the multiplier is generally greater for public investments and expenditure than for changes in taxes.6 The assumptions that are made about how the central bank responds to fiscal policy in the model is also of considerable importance. Other assumptions in the models also affect the size of the multipliers, e.g. the degree of complementarity between public and private consumption and how great frictions are for private investments. On account of all these uncertainties and decisive model assumptions, empirical studies of the size of fiscal multipliers are important.
6In a new class of models with heterogeneous households (“HANK models”), the fiscal multipliers are often greater than in macro models such as MAJA. For an overview, see for example Table 3 in Druedahl, Ravn, Sunder-Plassmann, Sundram and Waldstrøm (2025).
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Empirical studies
There is extensive empirical literature that estimates fiscal multipliers. Earlier studies used structural VAR models and found multipliers around or below 1. Later studies use exogenous events, such as increases in military expenditure, and find multipliers between 0.6 and 1.5. A separate category of literature studies tax changes and sometimes finds larger effects, but the results are uncertain. The effects of tax changes are generally difficult to assess as such fiscal policy measures are not independent of the economic situation.
More recent research uses microdata and regional variations to identify causal links. For example, Nakamura and Steinsson (2014) compare regions with different exposures to military expenditure. However, these studies identify relative multipliers, which requires model assumptions in order to translate them into aggregate effects. Swedish estimates of fiscal multipliers generally show that expenditure-based measures (public consumption and investments) have a greater effect on GDP than transfers and reductions of direct and indirect taxes. Hjelm and Stockhammar (2016) estimate multipliers during the inflation target period and find that the multipliers for most types of expenditure and tax decreases are mainly around 1, even if the results are uncertain. Czarnota and Stockhammar (2026) use the same method as Hjelm and Stockhammar (2016) on a longer selection. They find somewhat lower multipliers, but the level of uncertainty is still great.
The impact of fiscal policy on prices
For the central bank it is naturally important to understand the impact of fiscal policy not just on the real economy, but also on inflation. An approach that is often taken when assessing the impact of fiscal policy on inflation is to make use of the Phillips curve. As previously mentioned, the Phillips curve describes the correlation between economic activity (GDP) and inflation. By specifying the size of the fiscal multiplier, the Phillips curve can in turn be used to estimate the effect of fiscal policy on inflation.
In practice, the correlation between economic activity and inflation is not always that clear and can vary over time. There are several reasons for this. Firstly, the correlation can depend on the functioning of the economy. If the pricing behaviour of companies, or the way in which salary negotiations are conducted, changes, this can affect the gradient of the Phillips curve. The correlation can also depend on whether activity in the economy is high or low (for example, inflation may be affected more by changes in the economy if unemployment is low). Secondly, there are methodological problems associated with measuring the gradient of the Phillips curve. Several studies have shown that changes in inflation expectations can easily be mistaken for changes in the gradient of the Phillips curve. This means that if the credibility of the inflation target fluctuates over time (as it did, for example, in the USA in the 1970s and 1980s), there is no stable correlation to estimate. This means that the correlation between economic activity and inflation may be weaker than previously
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believed (see, for example, Hazell et al., 2022 who find that if unemployment is reduced by 1 percentage point, inflation increases by 0.03 percentage points). It is also worth mentioning that economic theory shows that the relationship between utilisation of resources (the GDP gap) and inflation is not completely unambiguous. The type of shock that the economy is exposed to has an impact on how inflation is affected. This applies, for example, to the Riksbank’s MAJA model.
It is not always possible to obtain a Phillips curve with a clear gradient, so the correlation between economic activity and inflation depends on the current stage of the economic cycle and the kind of policies that are pursued. That is why the Riksbank does not have a clearly communicated opinion on the gradient of the Phillips curve (in contrast, for example, to the neutral interest rate).
In Section 6.3 we discuss the Riksbank’s tools for assessing the impact of fiscal policy measures on GDP and inflation in greater detail.
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4 Macroeconomic developments in 2025
Two circumstances characterised the Swedish economy in 2025. Firstly, inflation was above target for a large part of the year. Secondly, the recovery of the economy remained weaker and more protracted than expected, especially during the first six months of the year. The fact that recovery was weaker than expected is similar to the development in 2024.
As regards the year as a whole, CPIF inflation amounted on average to 2.6 per cent, compared to 1.9 per cent in 2024, while CPIF excluding energy amounted to 2.8 per cent. At the same time, real economic growth was subdued. GDP increased by 1.5 per cent during the year, which was admittedly an improvement compared to 0.9 per cent in 2024 but was still considerably lower than previously forecast by the Riksbank. The labour market also weakened further during the year. Even though the number of people in employment increased, unemployment rose to 8.8 per cent during the third quarter of 2025, which can primarily be explained by the fact that the labour force increased more rapidly than employment.
The following section discusses macroeconomic developments during the year on a quarterly basis.
First quarter 2025
At the end of 2024, the Riksbank’s assessment was that inflation would stabilise close to target in 2025, while the Swedish economy would gradually recover following the interest rate cuts in 2024. ln forecasts from 2024, GDP growth for 2025 was estimated at 1.8 per cent on average, and CPIF inflation was expected to be around 1.8 per cent. The main scenario was therefore that the real economy would successively strengthen, at the same time as inflation would be compatible with the 2 per-cent inflation target.
The first significant deviation from this scenario was that inflation rose at the beginning of the year. Figure 4.1 shows that CPIF inflation rose once again above 2 per cent, after having been below target during the second half of 2024. In March, CPIF inflation was 2.3 per cent and CPIF excluding energy amounted to 3.0 per cent. However, the Riksbank made the assessment that the rise did not reflect the fact that inflationary pressure generally increases as a result of heavy demand. Instead, the rise was primarily assessed to depend on Statistics Sweden’s updated CPI weights, rising food prices, rent increases and certain administratively set prices. Its assessment was therefore that the period of higher inflation would not continue for long.
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Figure 4.1 CPIF and CPIF-XE inflation
Notes: The figure shows the inflation outcomes for CPIF and CPIF-XE.
Source: The Riksbank (2026).
Second quarter 2025
The second quarter was dominated by heavily increased international uncertainty. In early April, the US Administration announced significant increases in import tariffs, which led to considerable financial turbulence and falling stock markets. An especially notable element during this period was the developments in the currency market. Figure 4.2 shows that the trade-weighted exchange rate index KIX was strengthened from 124 to 118 during the second quarter as a result of appreciation of the Swedish krona, both against the US dollar and the euro as well as several other currencies. This deviated from a historical pattern where small currencies such as the Swedish krona are usually weakened during periods of financial unease.
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| Figure 4.2, KIX |
Notes: The figure shows the development of the competition-weighed exchange rate index (KIX). A higher value means a weaker krona.
Source: The Riksbank (2026).
At the same time, new domestic statistics were published that indicated that the development of the economy was weaker than expected. Figure 4.3 shows that when the national accounts for the first quarter were published at the end of May, GDP growth had fallen to approximately 1 per cent during the first quarter of the year. This was a clear indication that recovery was more sluggish than the Riksbank and other actors had previously anticipated. Figure 4.4 shows that the Riksbank revised its view of the GDP and employment gap significantly downwards in June. Furthermore, consumer confidence in the economy fell rapidly during the spring, at the same time as the labour market continued to develop in a weak direction. Inflation had also come in lower until May at between 2 and 2.5 per cent (see Figure 4.1).
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Figure 4.3 GDP growth
Notes: The figure shows GDP growth at each statistics publication. Note that GDP is revised backwards.
Source: The Riksbank (2025i, 2025j, 2025k, 2025l).
Figure 4.4 Measurement of economic activity: the GDP gap (left) and employment gap (right)
Notes: The figure shows the Riksbank’s GDP gap (left panel) and employment gap (right panel) with forecasts.
Source: The Riksbank (2025i, 2025j, 2025k, 2025l).
Third quarter 2025
During the summer, inflation once again increased more than expected. Figure
4.5shows that CPIF inflation in June was 2.8 per cent while the Riksbank’s most recent forecast was 2.4 per cent. CPIF inflation then remained above the June forecast by 0.5 percentage points in July and August. Inflation excluding energy was around 3 per cent during the summer months. The Riksbank chose to stick to the interpretation that the rise was mainly temporary as the increase
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| in inflation was driven by a limited number of factors, including technical ef- | |
| fects related to index weights and certain price increases in food and services. | |
| Figure 4.5 Inflation outcome and the Riksbank’s forecasts – CPIF (left) and | |
| CPIF-XE (right) |
Notes: The figure shows the inflation outcome (solid line) as well as the Riksbank’s forecasts for CPIF (left panel) and CPIF-XE (right panel).
Source: The Riksbank (2025i, 2025j, 2025k, 2025l).
In parallel, the development of the economy continued to be surprisingly negative. New information indicated that household consumption continued to develop weakly and that recovery of demand was on hold. GDP growth remained weak, at the same time as growth during the fourth quarter of 2024 and first quarter of 2025 had been adjusted downwards somewhat. Nor did the labour market show any clear signs of improvement. Even though employment figures were relatively high, unemployment was high and rising among people who usually have a strong position in the labour market, which indicates that the problems in the labour market were not just structural (the Riksbank, 2025k). The panel to the left in Figure 4.6 shows unemployment during the year (including backward revisions) and how it gradually increased.
Figure 4.6 Unemployment – new statistics (left), outcome and the Riksbank’s forecasts (right)
Notes: The figure shows unemployment at the time of each statistics publication including backward revisions (left panel) and unemployment with the Riksbank’s forecasts (right panel).
Source: The Riksbank (2025i, 2025j, 2025k, 2025l).
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Fourth quarter 2025
During the last quarter of the year, it became clearer that the global economy had been more resilient to the ongoing uncertainty than previously feared. De- spite increased US tariffs, geopolitical tensions and uncertainty regarding future trade policy decisions, world trade continued to develop relatively well.
For Sweden, there were growing signs during the autumn that economic recovery was finally under way. New statistics indicated that economic activity was increasing at the same time as previous GDP outcome was also revised upwards.
However, the labour market continued to be weak. Despite the fact that the number of people in employment increased, unemployment also continued to rise and reached 8.8 per cent during the third quarter of 2025. For the year, the employment rate was around 69 per cent. The reason why unemployment increased was that the labour force grew more rapidly than the number of people in labour. The panel to the right in Figure 4.6 shows that the Riksbank revised its forecast for unemployment upwards during the year. Towards the end of the year, inflation fell back towards target. In December 2025, CPIF amounted to 2.1 per cent, while CPIF excluding energy amounted to 2.3 per cent.
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5Monetary policy 20257
The Riksbank’s monetary policy decisions in 2025 were characterised by three overriding factors. Firstly, the rise in inflation at the start of the year was largely assessed to be temporary, driven by technical effects and certain specific prices, and it was not assessed to reflect a broad increase in prices. Secondly, the Swedish real economy continued during much of the year to be weak, especially in the labour market, even though signs of recovery gradually became stronger. Thirdly, international uncertainty increased considerably, primarily as a result of US trade policy, geopolitical conflicts and matters related to the sustainability of public finances in several major economies. During the year, the Riksbank therefore switched between interest rate decreases and biding its time. Figure 5.1 shows that the policy rate was lowered on a total of three occasions from 2.5 to 1.75 per cent.
Figure 5.1 The Riksbank’s policy rate in 2023–2025
Notes: Current data. Per cent. In 2025, the policy rate was lowered in January, June and September. At the five other meetings, it was left unchanged.
Source: The Riksbank.
Monetary policy meeting in January 2025
At its monetary policy meeting on 28 January 2025, the Riksbank decided to lower the policy rate by 0.25 percentage points to 2.25 per cent. The new information that had been obtained since the December meeting was essentially
7This section is based on the Riksbank (2026) and all the monetary policy reports and minutes from 2025 (the Riksbank, 2025a-l).
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not assessed to change the picture regarding the prospects for inflation and the economy. Inflationary pressure was considered to be associated with inflation around the 2 per-cent target, at the same time as the development of Swedish economic activity continued to be weak, despite certain indications of recovery. The Riksbank’s interpretation was therefore that the risk of high inflation was limited, while the need to support demand in the Swedish economy remained. The decision to lower the interest rate was therefore supported by the fact that a stronger economy was regarded as important both in itself and as a condition for stabilisation of inflation around target in the coming period.
Monetary policy meeting in March 2025
At its meeting of 19 March 2025, the Riksbank left the policy rate unchanged at 2.25 per cent. The most important new information ahead of this meeting was that inflation had been higher than expected at the start of the year. In February, CPIF inflation amounted to 2.9 per cent and CPIF excluding energy to 3.0 per cent. At the same time, the international situation had become more dramatic, with mounting trade policy tensions, especially in relation to the USA, and plans for increased defence expenditure in Europe. Despite this, the Riksbank assessed that the rise in inflation was mainly temporary. This was explained primarily by the CPI basket effect, that is, more rapid price increases on certain foods and certain particularly relative price movements. In a more long-term perspective, inflation prospects were thus considered to be largely unchanged. The Riksbank’s assessment was that this overall picture still applied in December. It therefore chose to follow the monetary policy plan communicated earlier and to let the policy rate remain unchanged. In its report, the Riksbank explicitly stated that the interest rate path from December remained unchanged and that the policy rate was expected to remain at the current level.
Monetary policy meeting in May 2025
At its meeting of 7 May 2025, the Executive Board decided to leave the policy rate unchanged at 2.25 per cent. The new information was dominated by greatly increased global uncertainty in the wake of the new US trade policy. Information about tariffs and countermeasures had given rise to considerable movements in financial markets, and prospects for growth had declined both in the USA and in Europe. For Sweden, growth prospects were somewhat weaker than in the March forecast. Consumer confidence had fallen markedly, while business confidence remained relatively stable, even if anecdotal information was beginning to indicate growing pessimism among companies too. At the same time, inflation was still somewhat elevated, but the Riksbank’s assessment was that new information supported the March assessment that the rise in inflation was temporary. The Executive Board therefore believed that it was wise to wait for more information before making any monetary policy
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| changes. Despite this, the assessment was that it was somewhat more probable | |
| that inflation would be lower than predicted in the March forecast. |
Monetary policy meeting in June 2025
At its monetary policy meeting on 17 June 2025, the Riksbank lowered the policy rate by 0.25 percentage points to 2.00 per cent. The new information showed that the Swedish economy was recovering at a slower rate than expected. GDP had weakened somewhat during the first quarter, and the labour market continued to be weak. At the same time, inflation had fallen and developed in accordance with the March forecast. The previous assessment that the rise in inflation at the start of the year was temporary was therefore reinforced. The Riksbank’s interpretation was that the economy needed more support, while the medium-term inflation outlook had been dampened. This argued in favour of a somewhat more expansionary monetary policy. The Executive Board therefore decided to lower the interest rate and signalled that a further reduction was likely during the year. The meeting therefore involved both a direct reduction of the interest rate and signals of continued preparedness to support the economy if recovery was to take time. Figure 5.2 shows that this was manifested as a large downward revision of the interest rate path (the largest revision of the year). Hassler, Krusell and Vestman (2024) and Hassler et al. (2025) pointed out that the Riksbank’s interest rate paths in 2023 and 2024 deviated significantly from market expectations. Figure 5.3 shows that this was not the case in 2025. However, there was relatively great market uncertainty ahead of the interest rate announcements in June and September.
Figure 5.2 The policy rate with the Riksbank’s interest rate paths
Notes: The figure shows the policy rate together with the Riksbank’s interest rate paths.
Source: The Riksbank (2025i, 2025j, 2025k, 2025l).
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Figure 5.3 The policy rate with the Riksbank’s and the National Institute of Economic Research’s interest rate paths as well as market expectations
Notes: The figure shows the policy rate together with the Riksbank’s and National Institute of Economic Research’s interest rate paths and market expectations.
Source: The Riksbank (2025i, 2025j, 2025k, 2025l), the National Institute of Economic Research (2025a, 2025b, 2025c, 2025d).
Monetary policy meeting in August 2025
At the meeting of 19 August 2025, the policy rate was left unchanged at 2.00 per cent. During the summer, inflation had been higher than expected, especially in June and July. At the same time, new information showed that growth continued to be low and that households remained careful in their consumption. The labour market did not show any clear signs of improvement either. Despite higher inflation, the Riksbank interpreted the outcome as primarily temporary. The Executive Board especially highlighted volatile summer prices, such as foreign travel and other seasonal services, as well as the effects of changed weights for CPI calculations. As economic recovery remained slow, the signal from June remained of a probability of a further decrease later in the year if the outlook continued in the same direction.
Monetary policy meeting in September 2025
At its meeting on 22 September 2025, the Riksbank lowered the policy rate by
0.25percentage points to 1.75 per cent. New information during the summer had provided further support to the prediction that inflation would fall back in the coming period, even if it would still be too high. Companies’ price-setting
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| plans had decreased, and the Swedish krona was strengthened, which contribut- | |
| ed to a more restrained view of inflation in the coming period. At the same | |
| time, GDP growth was still low in a more long-term perspective, and the de- | |
| velopment of the labour market continued to be weak, with new unemploy- | |
| ment outcomes that were somewhat worse than the June forecast. Furthermore, | |
| the Government had announced considerable tax changes for 2026, including | |
| a 50 per-cent cut in VAT on food, which would push down inflation without | |
| to any great extent changing the underlying inflationary pressure. The Riks- | |
| bank’s interpretation remained that inflation was only temporarily above tar- | |
| get, but that the medium-term inflation picture was compatible with the target, | |
| which is reflected in the September forecast, as shown in Figure 4.5.8 The high | |
| inflation outcome combined with the weak economic development meant that | |
| there was unusually great uncertainty about the Riksbank’s decision prior to | |
| its meeting, and there was an unusually great spread in the assessments (see, | |
| for example, Hultman and Vujic, 2025). |
Monetary policy meeting in November 2025
At its meeting in November 2025, the Executive Board decided to keep the policy rate unchanged at 1.75 per cent. The new information since September showed that inflation had fallen, roughly as forecast. At the same time, new data indicated that GDP growth in the third quarter had been somewhat stronger than expected, and that consumption had also developed slightly more than expected. However, the labour market remained weak, even if there were certain indications of a future improvement. The Riksbank interpreted this information as further confirmation of the fact that the rise in inflation earlier in the year had been temporary, and that economic recovery was now under way. The overall picture of the economy had therefore been confirmed and the Ex- ecutive Board followed its previously communicated plan where the policy rate was expected to remain at 1.75 per cent for the coming period.
Monetary policy meeting in December 2025
At the last monetary policy meeting of the year, on 17 December 2025, the policy rate was left unchanged at 1.75 per cent. New statistics showed that Sweden’s GDP in the third quarter had been clearly stronger than expected and previous GDP outcomes were also revised upwards. Inflation in November was close to the forecast from September, and indicators showed that inflationary pressure was close to target. The labour market remained weak, but the signs of improvement were increasing. The Riksbank made the assessment that recovery was even more established than earlier, while the inflation outlook was essentially unchanged. The interest rate level was therefore regarded
8 The mechanical effects on inflation as a result of the change in the VAT rate amount to 0.7 per cent. In Figure 4.5, this can be seen as the large revisions in the Riksbank’s forecasts from September and December.
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to be well-considered. In the interest rate path, the policy rate remained at 1.75 per cent for much of 2026 before it was gradually expected to be raised as utilisation of resources was restored to balance.
Summary
The Riksbank’s monetary policy in 2025 was characterised by gradual easing, in an environment where inflation was temporarily above target, at the same time as economic development was weak. The policy rate was lowered in January, June and September, from 2.50 per cent at the start of the year, to 1.75 per cent. It was kept unchanged at the other meetings. The Executive Board became successively more convinced that inflation would fall back and that recovery of the Swedish economy, despite being slow, had nevertheless started. However, the Riksbank emphasised throughout that there was considerable uncertainty, both as regards domestic demand and international risks. Monetary policy during the entire year was therefore a balancing act between supporting the real economy and ensuring that inflation returned and remained close to target in the medium term.
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6Evaluation
We will begin by studying the fulfilment of objectives, that is what has happened as regards inflation and inflation expectations during the year, after which we will assess whether we consider the monetary policy decisions to be appropriate and well-considered. We have placed particular emphasis on examining how the 2026 Budget Bill was analysed and on the Riksbank’s analytical capacity in terms of fiscal policy in general, as well as on the Riksbank’s view of the currency.
6.1 Fulfilment of objectives
Inflation expectations in 2025 were well-anchored around target. This is based on the survey conducted by the Riksbank among three different categories of actors: the social partners, purchasing managers and monetary market actors. Table 6.1 shows an extract from the survey.
Table 6.1 Inflation expectations according to the CPIF, five years ahead (December 2025)
| Mean | Median | Lowest | Highest | Standard | Responses | Response | |
| (%) | (%) | (%) | (%) | deviation | (numbers) | rate | |
| All | |||||||
| interviewees | 2.09 | 2.00 | 1.00 | 3.80 | 0.38 | 66 | 54% |
| Employees' | |||||||
| organisations | 2.04 | 2.00 | 2.00 | 2.40 | 0.13 | 10 | 77% |
| Employers' | |||||||
| organisations | 2.08 | 2.00 | 1.80 | 2.50 | 0.21 | 11 | 65% |
| Purchasing | |||||||
| managers, | |||||||
| manufacturing | 2.21 | 2.00 | 1.90 | 3.10 | 0.42 | 8 | 35% |
| Purchasing | |||||||
| managers, | |||||||
| trading | 1.85 | 2.00 | 1.00 | 2.50 | 0.56 | 8 | 31% |
| Monetary | |||||||
| market actors | 2.13 | 2.00 | 1.50 | 3.80 | 0.41 | 29 | 66% |
Source: https://www.origogroup.com/riksbanken/?date=2025.
In each respondent category, the median for expected inflation is 2 per cent during the coming five years. The average is also close to 2 per cent, and the cross-sectional variation in expectations is moderate, with a standard deviation of 0.1–0.6 percentage points depending on which actor you look at.
The fact that long-term inflation expectations are stable around the inflation target is perhaps the single most important indicator that the monetary policy framework and the central bank’s monetary policy are perceived as credible. Since this has been the case in Sweden for long periods of time, it is easy to take it for granted. In various contexts, it has been pointed out that the Swedish wage formation model is likely to contribute to the Riksbank being able to
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ignore short-term supply shocks to a greater extent than other central banks and still retain the credibility of the inflation target (see e.g. Hassler et al., 2024). An important precondition for this is that the social partners’ inflation expectations also remain intact when the economy is subjected to major disruptions. To illustrate this, we can make a comparison with Norway where a similar wage formation model is used. The panel to the left in Figure 6.1 shows inflation expectations (according to CPI) in Norway and Sweden. It is clear that expectations in Norway are systematically higher than in Sweden, even though the inflation target is also two per cent there. The higher expectations apply especially to the social partners. In Norway, there has recently been a debate on whether the social partners take sufficient account of the inflation target.9
Figure 6.1 Five-year inflation expectations – a comparison with Norway
Notes: The figure shows five-year CPI inflation expectations for Sweden and Norway. The left panel shows expectations among monetary market actors in Sweden and economists in Norway. The right panel shows expectations among wage-setting parties in each country.
Source: The Riksbank’s and Norges Bank’s survey of expectations.
Another important aspect of the fulfilment of objectives is the inflation outcome during the year. We share the Riksbank’s assessment (2026) that the fulfilment of objectives was relatively positive in this respect. As shown in figure 4.1, inflation over the whole of 2025 was slightly above target. In particular during the summer months, inflation was surprisingly high. From September onwards, CPIF inflation fell clearly back and in December it was 2.1 per cent. Underlying inflation also continued to decline in the latter half of the year. The Riksbank’s assessment that inflation was above target due to temporary factors that were not linked to generally higher inflationary pressure thus seems to have been correct, even though it is not possible to rule out that the fall in inflation may also be due to other factors.
6.2 Was monetary policy well-considered?
In our assessment of whether monetary policy was well-considered, we first make an overall assessment of monetary policy during the year. We then look
9See Holm and Storesletten (2026), Holm and Jasinski (2026) and Bjørnstad (2026) for some opinion pieces on the situation in Norway.
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| more closely at the September meeting, where new information about the cen- | |
| tral government budget for 2026 was added and prior to this meeting there was | |
| an unusually large amount of uncertainty in the market and among analysts | |
| about what the Riksbank would do. In addition, Deputy Governor Anna Seim | |
| entered a reservation against the decision. | |
| One way of thinking about the Riksbank’s pre-conditions for monetary pol- | |
| icy is to consider whether there is any conflict of interest between achieving | |
| the inflation target and promoting resource utilisation in the economy. If, for | |
| example, both demand and inflation are too high, there is no conflict of interest | |
| in raising the policy rate. However, if inflation is too high but resource utilisa- | |
| tion is low, there is a conflict between supporting the economy and keeping | |
| inflation close to target. The latter was particularly pronounced in 2023, when | |
| factors primarily related to supply led to excessively high inflation while de- | |
| mand was low, but the problem has also partly returned in 2025. | |
| Figure 6.2 shows how inflation (measured as CPIF) and resource utilisation | |
| (measured as the Riksbank’s assessment of the GDP gap) have been in the | |
| Swedish economy since 2022. The figure shows that inflation was elevated in | |
| 2022–2023, and that the recession gradually deepened and resource utilisation | |
| decreased. During the latter part of 2024, the economy ended up in a situation | |
| where resource utilisation was low and CPIF inflation was below target. This | |
| gave rise to criticism that the Riksbank had not lowered interest rates earlier | |
| (see Hassler et al, 2025 for an overview). From 2025, the economic situation | |
| was once again more complicated. CPIF inflation was permanently above the | |
| inflation target and at the same time resource utilisation was low due to a weak | |
| and delayed recovery in the economy. As we have reported, the Riksbank | |
| chose to interpret the higher inflation rate as being driven by temporary factors | |
| and lowered the policy rate on two occasions during the first half of the year, | |
| which was positive for the recovery of the economy. |
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Figure 6.2 Inflation and the GDP gap (2022–2025)
Notes: The figure shows the GDP (output) gap and CPIF minus 2 percentage points.
Source: The Riksbank (2026).
When the Riksbank has to deal with a situation characterised by a conflict of interest, it is more difficult to assess whether monetary policy was well-con- sidered. The Riksbank is also transparent about this, see for example the Riksbank (2026). The fact that the decisions at the various meetings were rarely obvious indicates that a different decision on the policy rate on a single occasion would probably have had small socioeconomic costs.
The September meeting and the Budget Bill for 2026
In September, important new information on fiscal policy was added. The 2026 Budget Bill entailed a more expansionary fiscal policy than the Riksbank had forecast in June (Table A3 summarises the reform table, that is the main increases in expenditure.) In the Monetary Policy Report from September, the Riksbank presented the most likely effects of this. As a direct consequence, the forecast for GDP growth was revised upwards by 0.2 percentage points. The forecast for CPIF was adjusted downwards in the short term as a result of the reduction in VAT on food, but in a fact box forecasts for CPIF inflation were also presented adjusted for the direct effect of lower VAT on food. Figure
6.3shows the forecast for the GDP (output) gap and inflation according to the CPIF and the CPIF excluding energy prices and adjusted for the effect of the decrease in VAT on food from September 2025 until the second quarter of 2028. The Riksbank made the assessment that inflation would be slightly above target initially and then closer to the target excluding the mechanical effect of lower VAT on food from the second half of 2026.10 In the Riksbank’s main scenario, the indirect effect of fiscal policy on inflation was judged to be
10Figure A1 shows the corresponding information with the GDP gap replaced by the employment gap.
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small and a majority of the Executive Board decided on a third cut in the policy rate at the September meeting.11
We address two potential objections to the decision in September. The first would be if the Budget Bill and the previously announced deviation from the fiscal policy framework were to threaten Sweden’s stabilisation policy framework where monetary policy has the main responsibility. Even though, for example, the Swedish Fiscal Policy Council (Swedish Fiscal Policy Council, 2026) criticised fiscal policy, we do not see the Budget Bill for 2026 as such a threat that it justifies a shift in monetary policy. The second objection would be if the Monetary Policy Report underestimates the effects of fiscal policy on the real economy. After having examined both the Monetary Policy Report and the documentation from internal meetings (two meetings internally known as “the large PBG1” and “the large PBG2”), our view is that it was reasonable to lower the policy rate in September.12 However, we believe that the Riksbank’s assessment of the effects of the Budget Bill on economic activity could have been more detailed, which we discuss in more detail in the next section.
Figure 6.3 Inflation and the output gap (CPIF and adjusted CPIF-XE)
Notes: The figure shows the output gap and the CPIF minus two percentage points (left panel) and the CPIF excluding energy and VAT on food minus 2 percentage points (right panel).
Source: The Riksbank (2025k).
6.3The Riksbank’s analytical capacity regarding fiscal policy
As a result of our examination of the response of monetary policy to the Budget Bill, we have also examined the Riksbank’s analytical capacity in terms of fiscal policy decisions. The Riksbank’s ability to analyse issues relating to fiscal policy is particularly important in times when the policy rate is close to its lower limit (when the value of coordination between monetary and
11Anna Seim entered a reservation against the decision as her assessment was that the risks of inflation being too high as a result of a vulnerable supply side had not been credited with sufficient importance in the Riksbank’s main scenario (the Riksbank, 2025f).
12Here, too, we assess that the costs would have been small if Deputy Governor Anna Seim’s line with an unchanged interest rate had been followed.
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fiscal policy is particularly great, see for example Ravn and Wilkins, 2026) and if fiscal policy were to have greater discretionary elements.13
The Riksbank has two main methodological approaches when it comes to analysing events in the economy (shocks). The model-based approach is based on the Maja model. In the monetary policy group, Maja is used mainly to provide support to the revision of forecasts by means of analysis of revision patterns. Maja is a further development of earlier models (Ramses I and II) and priority was given to developing how the outside world affects the Swedish economy. In relation to other parts of the model, fiscal policy is therefore not very well described in Maja. An analysis of the effects of the 2026 Budget Bill at a detailed level corresponding to the information in Table A3 cannot therefore be made in a simple way.14 The second, more empirical, approach is based on a BVAR model consisting of eleven variables describing the economy. However, none of these variables describe fiscal policy. This means that the BVAR model would not currently be an obviously suitable analysis tool for analysing the 2026 Budget Bill or fiscal policy in general. At the monetary policy group meeting in September, the Riksbank therefore used previous estimates of fiscal multipliers (in line with the estimates of Hjelm and Stockhammar, 2016, and Laun, 2025), which led to a revision of the forecast for GDP growth in 2026 by 0.2 percentage points. We believe that this was a reasonable approach, given that neither the Maja nor the BVAR model was wellsuited. We also believe that it is not self-evident that better-developed fiscal aspects in either model would have added greater precision to the forecast in view of the fundamental uncertainty associated with both approaches (see previous discussion in Section 3.3).
We thus have no criticism of the Riksbank's approach to revising the main scenario of the forecast in September. However, we do have two points of view concerning the scenario analysis that was carried out and the lack of robustness analysis.
Scenario analysis – a missed opportunity?
At the large PBG1, the tricky issue was raised of how to weigh up the risk that recovery may not start against the risk that overall economic policy may turn out to be quite expansionary. The fact that overall economic policy will be more expansionary than expected in the main scenario may in turn be due to several different factors. One reason may be a (positive) demand shock or a (negative) supply shock. In the monetary policy group meeting in September, the effect of higher demand among households was analysed. However, the effect of a negative supply shock was not analysed. In retrospect, in relation to the Executive Board’s disagreement over the monetary policy decision and
13Examples of discretionary elements include spending outside of budget, such as the increase military spending in 2026-2034.
14The model includes an exogenous process for public consumption, but concepts such as national debt and budget balance are not well defined.
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| Anna Seim’s justification for her reservation in the minutes, the scenario anal- | |
| ysis appears to be weak.15 It may be the case that this was a missed opportunity | |
| to use scenario analysis to more accurately understand the differences in the | |
| assessments, also internally, and to possibly also communicate about them us- | |
| ing scenarios. This may be due to a time or resource shortage. If so, this high- | |
| lights the value of early involvement of the members of the Executive Board | |
| in the scenario analysis (see discussion on this in Flodén, 2024, and Breman | |
| and Seim, 2025). But it may also be the case that the scenario envisaged in the | |
| reservation is difficult to analyse with existing methods. We do not have | |
| enough knowledge about the tools to determine if this was the case. |
Lack of robustness analysis
Given the large uncertainty around the size of fiscal multipliers, we believe that it would have been reasonable to subject the main scenario to a robustness test. Our closer examination of the Riksbank’s assumptions regarding the Budget Bill as early as June shows that the single largest change between June and September concerned the item indirect taxes, where the budget turned out to be SEK 14 billion more expansionary compared with the June forecast. At the same time, a fairly low multiplier was used for this item (0.35), which is more consistent with the National Institute of Economic Research’s model Selma than with many empirical estimates.16 If the Riksbank had used a higher but still reasonable multiplier, the forecast would have been significantly higher. This point about robustness analysis is reinforced by the fact that earlier assessments from the Riksbank also contain analyses of fiscal policy effects. We are lacking a discussion about this in the monetary policy group. One can express doubt as to whether the large PPG1 is the right forum for such a discussion, but a robustness analysis and general questioning of existing methods, in which particular weaknesses and uncertainties are highlighted, are important for the development of internal policy and methodology and perhaps especially since an overly expansionary economic policy was considered to be a significant risk. By illustrating uncertainties in the methods in the presence of the Executive Board, it is possible to secure broad support and gain legitimacy for necessary development work, which in the long run is an important element for reducing the risk of major policy mistakes.
Ravn’s and Wilkin’s views on the analytical capacity of fiscal policy
Finally, we would like to relate our discussion of analytical capacity to Ravn and Wilkins (2026). In their more comprehensive assessment of the Riksbank,
15 In the minutes from September, Anna Seim argues that the main scenario does not sufficiently reflect the probability that inflation could rise surprisingly due to a vulnerable supply side in combination with, for example, an expansionary fiscal policy in 2026.
16 For example, the fiscal multiplier for indirect taxes is around 1.25 in Hjelm and Stockhammar (2016), and around 0.50 in Czarnota and Stockhammar (2026).
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they describe several model limitations and propose, for example, that Maja should be further developed as regards the housing market – and fiscal policy. They also discuss known weaknesses in the methodological approaches used by the Riksbank (i.e. BVAR and Maja), but where current research does not offer any direct solutions in the form of further development of the models. One of their proposals is to develop and adapt the scenario analysis to allow for limitations of the models. We believe that the uncertainties surrounding the effects of fiscal policy are a good example of this. These uncertainties will not be reduced by developing fiscal policy analysis within the framework of Maja, as many overall model assumptions will still determine the size of the fiscal multipliers. In addition, fundamental changes to the whole model would be required to develop a reasonable description of fiscal policy, such as the introduction of heterogeneity among the actors involved in the model. A more appropriate approach would instead be to carry out the scenario and robustness analysis described above.17
6.4The Riksbank’s view of the exchange rate
Early evaluations by CeMoF have discusssed the Riksbank’s view of the exchange rate. In 2024, the Riksbank feared a weakening of the krona if more reductions in the policy rate were to be implemented than those implemented by other central banks. Hassler et al. (2025) believed that the strong correlation between changes in the policy rate and the exchange rate that the Riksbank seemed to believe in, did not actually exist. The Riksbank has also argued in recent years that the krona is undervalued (e.g. Thedéen, 2023 and the Riksbank, 2023).
In 2025, the krona was strengthened (see Figure 4.2), which was in line with the Riksbank’s forecasts shown as red lines in the panel to the left in Figure 6.4. If we look at the left panel in isolation, we can also interpret the development in such a way that the Riksbank forecasts from 2023 to 2024 were finally confirmed. However, the panel to the right shows that this type of forecast seems to be systematic for the Riksbank. The panel shows that at least since 2013 the Riksbank has expected a strengthening of the krona against other currencies, while the trend has been that the krona has weakened.
17A further example where a robustness analysis or a developed scenario analysis would have been particularly valuable was when the major inflation shock occurred in 2022. A wellknown limitation in the Riksbank’s two main models (Maja and BVAR) is that they are less reliable in the event of major disruptions that have not previously been observed. This is also highlighted by Ravn and Wilkins (Ravn and Wilkins, 2026). When a seemingly unusually large disruption occurs, the value of a robustness or scenario analysis is therefore significantly greater.
37
| 2025/26:RFR17 | 6 EVALUATION |
| Figure 6.4 KIX [the “krona index”] – forecasts since 2023 (left) and since | |
| 2013 (right) |
Notes: The figures show the competitive exchange rate (KIX) and the Riksbank’s forecast. The first panel shows developments since 2022. The second panel shows developments since 2013 (Figure 1 in Rosén and Vredin, 2025).
Source: The Riksbank (2025i, 2025j, 2025k, 2025l, 2026)) and Rosén and Vredin (2025).
The basic problem with the Riksbank’s forecasts is that the models on which they are based perform poorly, in principle no better than the prediction that tomorrow’s exchange rate will be equal to that of today. This was also the message from Olav Syrstad at a seminar on driving forces behind the development of the krona with Deputy Governor Anna Seim in November 2025. The Deputy Governor of the Riksbank stated at the same seminar on the development of the krona that “financial markets are so complex, and the disruptions that affect them and the macroeconomy so extensive and frequent, that forecasts about the future rarely come into effect” (the Riksbank, 2025m). One reason for this is that purchasing power parity as an anchor for the exchange rate only applies in such a long-term perspective that it lacks practical significance for a more short-term forecast. Ravn and Wilkins (2026) also discuss the Riksbank’s forecasts and views on the exchange rate and argue that it is not self-evident that the krona has gradually been undervalued. Our view is that the Riksbank could have much to gain in terms of confidence by having a more neutral view of the development of the krona. Norges Bank, for example, uses the current rate as a currency forecast, provided that the interest rate path presented at their meeting is in line with market expectations.18
18See the in-depth article on “Kronekursen”in Norges Bank (2026).
38
2025/26:RFR17
7Conclusions
In 2025, Sweden’s economy was characterised by a prolonged recession in which GDP growth remained low and the development in the labour market was weak. At the same time, for much of the year, inflation was above the Riksbank’s target of 2 per cent. The Riksbank was thus in a difficult situation where the benefit from stimulating the real economy had to be weighed up against the risk that inflation would become entrenched at too high a level. The Riksbank chose to reduce the interest rate gradually during the year from 2.50 per cent to 1.75 per cent. Decisions to lower the interest rate were motivated by the need to stimulate the real economy to ensure that inflation would not fall too much below target in the long term. At the same time, the excessively high level of inflation was judged to be mainly due to temporary factors and not to reflect strong demand or broad underlying inflationary pressure.
Our assessment is that during the year monetary policy fulfilled its objectives and was well-considered. We agree with the Riksbank’s assessment that a gradually more expansionary monetary policy was reasonable in order to support the recovery in the economy. At the same time, the long-term inflation expectations were well anchored around the inflation target, despite inflation exceeding the target, which clearly indicates that monetary policy was perceived as credible.
We have three comments regarding the Riksbank’s decision-making process and analysis. Firstly, we would like to see extended use of scenario analysis. Especially when the Executive Board disagrees on the setting of the interest rates, it should be possible to use the scenario analysis to a greater extent to clarify the differences. Secondly, we believe that the analysis of the more expansionary fiscal policy announced during the year could have been more detailed. Here, we believe that there are major model uncertainties regarding the effects of various fiscal policy measures on the real economy and inflation. Therefore, it is reasonable to allow for this in a robustness analysis, e.g. the size of fiscal multipliers, in order to clarify uncertainties in forecasts. Thirdly, we find that the Riksbank’s credibility could increase if its stance on the value of the krona was more neutral. However, these recommendations should be regarded as marginal adjustments rather than fundamental criticisms.
39
2025/26:RFR17
8References
Bjørnstad, R. (2026). Jo, LO aksepterer inflasjonsmålet. Dagens Næringsliv 18 April. https://www.dn.no/innlegg/pengepolitikk/inflasjonsstyring/styrings renten/jo-lo-aksepterer-inflasjonsmalet/2-1-1975595.
Breman, A. and Seim, A. (2025). Openness and clarity – key ingredients in Riksbank communication. Sveriges Riksbank Economic Review (2), 5–23.
Czarnota, A. and Stockhammar, P. (2026). Fiscal Policy Effects on Swedish Inflation. Report to the Swedish Fiscal Policy Council 2026/1.
Druedahl, J., Ravn, S.H., Sunder-Plassmann, L., Sundram, J. and Waldstrøm, N. (2025). Fiscal Multipliers in Small Open Economies with Heterogeneous Households. IMF Economic Review, 73, 654–707.
Flodén, M. (2024). Communicating future monetary policy – reflections after eleven years as member of the Riksbank’s Executive Board, speech at Nordea on 17 April.
Hassler, J., Krusell, P. and Vestman, R. (2024). Swedish monetary policy 2023, Reports from the Riksdag 2023/24:RFR15.
Hassler, J., Krusell, P. and Vestman, R. (2025). Swedish monetary policy 2024, Reports from the Riksdag 2024/25: RFR13.
Hazell, J., Herreño, J., Nakamura, E. and Steinsson, J. (2022). The slope of the Phillips curve: Evidence from U.S. states, The Quarterly Journal of Economics, 137(3), 1299–1344.
Hjelm, G. and Stockhammar, P. (2016). Short Run Effects of Fiscal Policy on GDP and Employment: Swedish Evidence. National Institute of Economic Research, Working Paper No. 147, November.
Holm, M. and Storesletten, K. (2026). Vil høyere rente egentlig gi lavere inflasjon? Aftenposten 7 april. https://www.aftenposten.no/meninger/debatt/ i/d446V1/kan-sentralbanker-i-alle-disse-aarene-virkelig-ha-tatt-saa-feil-og- misforstaatt-hvordan-renten-virker-paa-inflasjonen.
Holm, M. and Jasinski, M. (2026). Når skal LO akseptere at Norge faktisk har et inflasjonsmål? Dagens Næringsliv 15 April. https://www.dn.no/inn- legg/pengepolitikk/styringsrenten/inflasjon/nar-skal-lo-akseptere-at-norge- faktisk-har-et-inflasjonsmal/2-1-1973171.
Hultman, A. and Vujic, I. (2025). Oenig riksbank sänker räntan: “Rätt beslut”. Swedish daily newspaper 23 September. https://www.svd.se/a/935kyp/riksbanken-sanker-rantan.
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Laun, T. (2025). Finanspolitiska multiplikatorer i SELMA. National Institute of Economic Research, Comment, December.
National Institute of Economic Research (2025a). The Swedish Economy, March 2025.
National Institute of Economic Research (2025b). The Swedish Economy, June 2025.
National Institute of Economic Research (2025c). The Swedish Economy, September 2025.
National Institute of Economic Research (2025b). The Swedish Economy, December 2025.
Nakamura, E. and Steinsson, J. (2014). Fiscal Stimulus in a Monetary Union: Evidence from US Regions. American Economic Review, 104(3), 753–792.
Norges Bank (2026). Monetary Policy Statement, 1/2026.
Ravn, M. and Wilkens, C. (2026). Evaluation of the Riksbank’s monetary policy 2015–2024.
The Riksbank (2023). Consultation response to the National Debt Office’s proposed guidelines for managing the national debt 2024–2027. File no. 2023-01072.
The Riksbank (2025a). Minutes of the Monetary Policy Meeting held on 28 January 2025.
The Riksbank (2025b). Minutes of the Monetary Policy Meeting held on 19 March 2025.
The Riksbank (2025c). Minutes of the Monetary Policy Meeting held on 07 May 2025.
The Riksbank (2025d). Minutes of the Monetary Policy Meeting held on 17 June 2025.
The Riksbank (2025e). Minutes of the Monetary Policy Meeting held on 29 August 2025.
The Riksbank (2025f). Minutes of the Monetary Policy Meeting held on 22 September 2025.
The Riksbank (2025g). Minutes of the Monetary Policy Meeting held on 04 November 2025.
The Riksbank (2025h). Minutes of the Monetary Policy Meeting held on 17 December 2025.
The Riksbank (2025i). Monetary policy report, March 2025.
The Riksbank (2025j). Monetary policy report, June 2025.
41
| 2025/26:RFR17 | 8 REFERENCES |
The Riksbank (2025k). Monetary policy report, September 2025.
The Riksbank (2025l). Monetary policy report, December 2025.
The Riksbank (2025m). Seminar on the driving forces behind the development of the krona, 14 November, https://www.riksbank.se/sv/press- och-publicerat/riksbanken-play/2025/seminarium-om-drivkrafter-bakom- kronans-utveckling-med-vice-riksbankschef-anna-seim/
The Riksbank (2026). Account of Monetary Policy, 2025.
Rosén, G. and Vredin, A. (2025). Går det att förstå växelkursers utveckling med en ny modell? Sveriges Riksbank Staff memo, November 2025.
Swedish Fiscal Policy Council (2026). Svensk finanspolitik 2026.
Thedéen, E. (2023). Thedéen: Kronan kommer att stärkas på sikt, speech on 22 September at SNS/Swedish House of Finance.
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2025/26:RFR17
9Appendix
Table A1 Monetary policy decisions 2025
| Date of meeting | Policy rate | Grounds for the decision* | |
| Change | New level | ||
| 29 January (U) | -0.25 | 2.25 | Inflationary pressures are deemed consistent |
| with inflation of around 2 per cent. At the same | |||
| time, economic activity is weak, although there | |||
| are signs of a rebound. The Executive Board has | |||
| decided to cut the policy rate from 2.5 to 2.25 per | |||
| cent. The forecast for the policy rate made in De- | |||
| cember essentially holds, but the Executive | |||
| Board is prepared to act if the outlook for infla- | |||
| tion and economic activity changes. | |||
| 30 March (R) | 0 | 2.25 | Despite the substantial global turbulence, the |
| outlook for inflation and economic activity in | |||
| Sweden is expected to remain broadly intact. The | |||
| recovery of the Swedish economy has begun, but | |||
| activity is still weak. Inflation is expected to be | |||
| between 2 and 3 per cent this year, and then to | |||
| fall and stabilise close to the target. The Execu- | |||
| tive Board has decided to keep the policy rate un- | |||
| changed at 2.25 per cent and assesses that the | |||
| rate will remain at this level going forward. The | |||
| Riksbank monitors developments closely and will | |||
| act if the outlook for inflation and economic ac- | |||
| tivity so requires. | |||
| 8 May (U) | 0 | 2.25 | The increased uncertainty abroad implies that |
| the economic outlook appears to be slightly | |||
| weaker than in the March forecast. The impact | |||
| on inflation is more difficult to assess. The Exec- | |||
| utive Board considers that monetary policy is | |||
| currently well-balanced and that it is wise to | |||
| await further information to obtain a clearer pic- | |||
| ture of the outlook. The policy rate is therefore | |||
| held unchanged at 2.25 per cent. The assessment | |||
| of the Executive Board is that it is somewhat | |||
| more probable that inflation will be lower than | |||
| that it will be higher than in the March forecast. | |||
| This could suggest a slight easing of monetary | |||
| policy going forward. | |||
| 18 June (R) | -0.25 | 2.00 | The economic recovery that began last year has |
| lost momentum, and inflation is expected to be | |||
| somewhat lower than in the previous forecast. | |||
The Executive Board has therefore decided to cut the policy rate by 0.25 percentage points to 2 per cent. The forecast for the policy rate entails some probability of another cut this year. The lower
43
2025/26:RFR179 APPENDIX
| Date of meeting | Policy rate | Grounds for the decision* | |
| Change | New level | ||
| interest rate will stabilise inflation at the target | |||
| and contribute to strengthening economic activ- | |||
| ity. | |||
| 20 August (U) | 0 | 2.00 | Inflation has risen more than expected over the |
| summer and is somewhat above the target. How- | |||
| ever, the upturn is assessed to be due to tempo- | |||
| rary factors. At the same time, economic activity | |||
| remains weak. Although developments have de- | |||
| viated somewhat from the Riksbank’s forecast in | |||
| June, the Executive Board assesses that the out- | |||
| look remains largely the same. The Executive | |||
| Board has therefore decided to leave the policy | |||
| rate unchanged at 2 per cent and still sees some | |||
| probability of a further interest rate cut this year. | |||
| 23 September (R) | -0.25 | 1.75 | To provide further support to economic activity |
| and to stabilise inflation at the target in the me- | |||
| dium term, the Executive Board has decided to | |||
| cut the policy rate by 0.25 percentage points, to | |||
| 1.75 per cent. If the outlook for inflation and eco- | |||
| nomic activity holds, the policy rate is expected | |||
| to remain at this level for some time to come. | |||
| 5 November (U) | 0 | 1.75 | The elevated inflation has begun to fall back, at |
| the same time as economic activity is on its way | |||
| to recovery. The outlook for inflation and eco- | |||
| nomic activity thus remains largely unchanged | |||
| and the Executive Board has decided to leave the | |||
| policy rate unchanged at 1.75 per cent. The pol- | |||
| icy rate is expected to remain at this level for | |||
| some time to come. | |||
| 18 December (R) | 0 | 1.75 | The prospects for the Swedish economy are look- |
| ing brighter. Although it will take time before | |||
| economic activity returns to normal, the recovery | |||
| is under way. At the same time, inflation has ap- | |||
proached 2 per cent. The Executive Board of the Riksbank has decided to leave the policy rate unchanged at 1.75 per cent and the rate is expected to remain at this level for some time to come.
Notes: * Quotes from the summaries in the press releases and minutes. “U” and “R” respectively denote whether the occasion coincided with a monetary policy update or report.
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9 APPENDIX2025/26:RFR17
Table A2 Monetary policy decisions 2024
| Date of meeting | Policy rate | Grounds for the decision* | |
| Change | New level | ||
| 31 January (U) | 0 | 4.0 | The Riksbank's rate increases have contributed to |
| a fall in the earlier high inflation. However, when | |||
| energy prices are excluded, inflation is still too | |||
| high and there is a risk of setbacks. The Executive | |||
| Board has decided to leave the policy rate un- | |||
| changed at 4 per cent. The assessment is that con- | |||
| tractionary monetary policy is still needed to sta- | |||
| bilise inflation close to target. At the same time, the | |||
| Executive Board now assesses that there is less risk | |||
| of inflation becoming entrenched at levels that are | |||
| too high. The policy rate can therefore probably be | |||
| cut sooner than was indicated in the November | |||
| forecast. The pace of government bond sales in- | |||
| creased to 6.5 billion per month. | |||
| 26 March (R) | 0 | 4.0 | Inflation is in the process of stabilising at the tar- |
| get, but inflationary pressures are still somewhat | |||
| elevated. The Executive Board has therefore de- | |||
| cided to leave the policy rate unchanged at 4 per | |||
| cent. It is likely that the policy rate can be cut in | |||
| May or June if the outlook for inflation remains fa- | |||
| vourable. | |||
| 7 May (U) | -0.25 | 3.75 | Inflation is approaching the target while economic |
| activity is weak. The Riksbank can therefore ease | |||
| monetary policy. The Executive Board has decided | |||
| to cut the policy rate by 0.25 percentage points to | |||
| 3.75 per cent. If the outlook for inflation still holds, | |||
| the policy rate is expected to be cut two more times | |||
| during the second half of the year. | |||
| 26 June (R) | 0 | 3.75 | Inflation is close to the target and economic activ- |
| ity is weak. The Executive Board considers that | |||
| monetary policy should be adjusted gradually and | |||
| has decided to hold the policy rate unchanged at | |||
| 3.75 per cent. If inflation prospects remain the | |||
| same, the policy rate can be cut two or three times | |||
| during the second half of the year. | |||
| 19 August (U) | -0.25 | 3.50 | Inflation is in the process of stabilising at the tar- |
| get, and economic activity is weak. The Executive | |||
| Board has decided to cut the policy rate by 0.25 | |||
| percentage points to 3.5 per cent. If the inflation | |||
| outlook remains the same, the policy rate can be | |||
| cut two or three more times this year, which is | |||
| somewhat faster that the Executive Board assessed | |||
| in June. | |||
| 24 September (R) | -0.25 | 3.25 | The Executive Board has decided to cut the policy |
| rate by 0.25 percentage points to 3.25 per cent. If | |||
| the outlook for inflation and economic activity | |||
| remains unchanged, the policy rate may also be cut | |||
45
2025/26:RFR179 APPENDIX
| Date of meeting | Policy rate | Grounds for the decision* | |
| Change | New level | ||
| at the two remaining monetary policy meetings this | |||
| year. A cut of 0.5 percentage points is possible at | |||
| one of these meetings. Moreover, the forecast | |||
| indicates one or two further rate cuts during the | |||
| first half of 2025. The policy rate is thus expected | |||
| to be cut at a clearly faster pace than was | |||
| previously communicated, which contributes to | |||
| stronger economic activity and an inflation rate | |||
| close to the target. | |||
| 6 November (U) | -0.50 | 2.75 | To provide further support to the economy and |
| help inflation stabilise at the target, the Executive | |||
| Board has decided to cut the policy rate by 0.5 per- | |||
| centage points to 2.75 per cent. If the outlook for | |||
| economic activity and inflation remains the same, | |||
| the policy rate may also be cut in December and | |||
| during the first half of 2025, in line with what was | |||
| communicated in September. | |||
| 18 December (R) | -0.25 | 2.50 | To provide further support to the economy and |
| help inflation stabilise at the target, the Executive | |||
| Board has decided to cut the policy rate by 0.25 | |||
percentage points to 2.5 per cent. If the outlook for inflation and economic activity remains unchanged, the policy rate may be cut once again during the first half of 2025.
Notes: * Quotations from the summaries in m * Quotations from the summaries in n * Quotations from the summaries in press releases and minutes of meetings. “U” and “R” respectively denote whether the occasion coincided with a monetary policy update or report.
Table A3 Reform table – Budget Bill 2026
| 2026 | 2027 | 2028 | News item in the | |
| media | ||||
| Reduced tax on work and pensions | 21.4 | 21.4 | 21.4 | 8 September |
| Temporarily reduced VAT on food | 15.9 | 21.3 | 0 | 1 September |
| Additional funding to defence | Agreement | |||
| 12.1 | 16.2 | 18.1 | in June | |
| Reduced tax on electricity | 6.52 | 6.6 | 6.68 | 8 September |
| Reduction of employer contributions | 10 September | |||
| for young people | 6.1 | 5.6 | 0 | |
| Schools | 3.1 | 1.9 | 0 | |
| Other matters | 25.78 | 33.4 | 38.32 | |
| Total | 90.9 | 106.4 | 84.5 |
Notes: Amounts in SEK billion. Source: 2026 Budget Bill (Govt. bill 2025/26:1), Table 1.1
46
| 9 APPENDIX | 2025/26:RFR17 |
Figure 9.1. Inflation and the employment gap (2024Q1-2025Q2)
Notes: The figure shows the employment gap and the CPIF minus 2 percentage points (left panel) and the CPIF excl energy and VAT on food (right panel).
Source: The Riksbank (2025k).
Figure 9.2 Unemployment with forecasts from the Riksbank and the
National Institute of Economic Research
Notes: The figure shows unemployment and the forecasts from the Riksbank and the National Institute of Economic Research.
Source: The Riksbank (2025i, 2025j, 2025k, 2025l), the National Institute of Economic Research (2025a, 2025b, 2025c, 2025d).
47
2025/26:RFR17
ANNEXE 1
Annual evaluations of Swedish monetary policy
2022/23:RFR5 Evaluation of monetary policy 2022 by John Hassler, Per Krusell and Anna Seim
2023/24:RFR15 Swedish monetary policy 2023 by John Hassler, Per Krusell and Roine Vestman
2024/25:RFR13 Swedish monetary policy 2024
by John Hassler, Karin Kinnerud and Roine Vestman
48
2025/26:RFR17
ANNEXE 2
Evaluations of monetary policy in a more long-term perspective
| Evaluation period | Evaluators | |
| 2006/07: RFR1, committee report | 1995–2005 | Francesco Giavazzi and |
| 2006/07:FiU27 | Frederic Mishkin | |
| 2010/11: RFR5, committee report | 2005–2010 | Charles Goodhart and |
| 2012/13: FiU12 | Jean-Charles Rochet | |
| 2015/16: RFR6, committee report | 2010–2015 | Marvin Goodfriend and |
| 2015/16:FiU41 | Mervyn King | |
| 2021/22: RFR4, committee report | 2015–2020 | Patrick Honohan and |
| 2021/22:FiU24 | Karnit Flug | |
| 2025/26: RFR8, committee report | 2015–2024 | Morten Ravn and |
| 2025/26:FiU27 | Carolyn Wilkins |
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