EUR/SEK scales 1-week peak as Riksbank keeps rates on hold

The EUR/SEK currency pair held near a fresh one-week high of 11.0577 on Thursday, after Sweden’s Riksbank left borrowing costs without change, highlighting a largely unchanged inflation and GDP growth outlook.

Riksbank left its key policy rate intact at 2.25% at its March meeting, in line with market consensus.

Policy makers said they expected inflation would remain above the 2% target for the rest of 2025 before stabilizing near that level in 2026.

At the same time, economic recovery is on track, underpinned by rising real wages, lower interest expenses and higher defense and government spending.

Yet, policy makers cautioned that risks continued to persist – most notably, escalating US trade conflicts, geopolitical tensions in Europe, the Krona exchange rate as well as shifts in household spending and corporate investment.

Riksbank also said it remained ready to adjust policy in case inflation deviates.

The central bank has delivered six rate cuts since May 2024, or a total of 175 basis points.

Meanwhile, the Euro’s strength has been boosted after Germany’s parliament approved a substantial spending package. This landmark decision, endorsed by a coalition of center-right, center-left, and Green party members, effectively dismantles years of stringent fiscal conservatism.

By loosening borrowing limits, the bill paves the way for hundreds of billions of euros to be poured into defense and infrastructure projects. The move is seen as a crucial step towards revitalizing the German economy, which has faced stagnation.

The EUR/SEK currency pair was last edging up 0.46% to trade at 11.0423.