European Daily Riksbank and Norges Bank Diverging Once More

Economics Research 21 September 2026 | 4:19PM BST

European Daily: Riksbank and Norges Bank Diverging Once More?

n Ahead of the Riksbank’s and Norges Bank’s September meetings, in this Daily we Katya Vashkinskaya | update the near-term outlook for Sweden and Norway, incorporating higher Goldman Sachs International energy prices and recent activity and inflation data. n Since the August meeting, Swedish core inflation surprised somewhat to the downside, closing the gap to Riksbank’s latest forecast. Incorporating the latest data, our updated energy forecasts, and building cost pressures, we, however, now see core inflation rising to 2.5%yoy in 2027Q2. On the activity front, we expect Q3 to record another quarter of expansion and see the economy growing by 2.6%yoy in 2026. n Given a notable division among the Board members and a still subdued labour market, we believe the Executive Board will need to see more evidence of persistent inflationary pressures in the data and expect the Riksbank to stay on hold at the upcoming September meeting, before starting to raise the policy rate in December, reaching 2.25% in 2027. n At the August meeting, Norges Bank’s Governor Wolden Bache guided that inflation has been lower than projected, but it is too early to conclude that the inflation outlook has changed materially. With the latest data, we nudge our inflation forecast higher and now see core inflation only slightly lower than Norges Bank’s latest projections from 2026Q4. With subdued H1 activity so far, we expect annual GDP growth of 1.1% this year, close to consensus and Norges Bank’s forecasts. n Upside risks to energy prices, foreign inflation and rates, broadly stable underlying inflationary pressures and Norges Bank’s recent hawkishness in the reaction function, all suggest some further upside pressure on the policy rate path. Our baseline therefore remains one of a hike at the September meeting to 4.5%, but this is a close call and could materialise at a later meeting this year.

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Riksbank and Norges Bank Diverging Once More?

Ahead of the Riksbank’s and Norges Bank’s September meetings, in this Daily we update the near-term outlook for Sweden and Norway, incorporating higher energy prices and recent activity and inflation data. We stick with our call that the Riksbank will stay on hold at the upcoming meeting, as the Board will need to see more evidence of broader and more persistent inflationary pressures before warranting earlier tightening. Norges Bank’s September meeting decision remains a very close call, as recent inflation surprises and broadly subdued activity point to less need for additional tightening beyond 4.25%. However, we maintain our call for a final 25bp hike to 4.5% at this week’s meeting, taking into account the hawkish bias in the reaction function and the fact that underlying inflationary pressures in Norway have not changed materially over the last months.

Riksbank Will Stay on Hold in September At its last meeting in August, the Riksbank’s Executive Board left the policy rate unchanged at 1.75%, in line with our and consensus expectations. The communication appeared balanced, which, in the context of recent data surprises, sounded somewhat dovish. The Monetary Policy Update (MPU) stated that while “both growth and inflation have been higher than was forecast in June, and there is still a risk of underlying inflation becoming too high, ... companies’ pricing plans have been subdued, disruptions in global supply chains have declined and the labour market has been somewhat weaker than expected”. Riksbank’s August meeting minutes, however, sounded more hawkish than what the MPU suggested. The focus of the Board remained on the upside risk for inflation, which had broadened from external supply risks to stronger domestic demand and firmer underlying inflation. Still, no one called for any immediate action, which suggests a move as early as September (or even November) remains unlikely.

Since the August meeting, Swedish core…