Swedens Policy Rate

Key Interest Rate Remains at 2 Percent – Riksbank Maintains Course

The Riksbank has decided to keep the key interest rate at 2 percent this month as well. This decision means that the interest rate level has remained unchanged since the end of June, despite signs that inflation is slightly above the target.

Today's Interest Rate Announcement

On August 20, 2025, the Riksbank announced that the key interest rate, also known as the repo rate, will remain unchanged at 2 percent. This is the same level as since June 25, 2025, after it was lowered from 2.25 percent in May. The decision is based on inflation, measured by the CPIF, which has been between 2.3 and 3 percent in recent months, close to the Riksbank's target. By keeping the rate steady, the Riksbank aims to balance the risk of continued high inflation against the need for stability for households and businesses.

Impact on Households

When the key interest rate remains at 2 percent, bank mortgage rates often hover around 3 percent (key rate + 1 percentage point), while personal loans can reach about 4.5 percent (key rate + 2.5 percentage points). For households with mortgages, this results in the following monthly expenses, based on straight amortization and only interest costs:

• 1 million SEK: 3% interest = 2,500 SEK/month
• 3 million SEK: 3% interest = 7,500 SEK/month
• 5 million SEK: 3% interest = 12,500 SEK/month

For personal loans, the interest rate is approximately 4.5 percent:

• 1 million SEK: 4.5% interest = 3,750 SEK/month
• 3 million SEK: 4.5% interest = 11,250 SEK/month
• 5 million SEK: 4.5% interest = 18,750 SEK/month

Since the key rate has remained unchanged since last month, interest costs are also the same as before. For households with variable loans, today's announcement therefore means no change in housing finances.

History and Development

Over the past year, the key interest rate has gradually decreased from 3.5 percent (August 2024) to today's 2 percent. The latest reduction occurred in May 2025, when the rate was lowered from 2.25 to 2 percent. Between September 2024 and January 2025, the rate was between 3.5 and 2.5 percent before falling more rapidly in spring 2025. Inflation, measured by the CPIF, has also risen during summer 2025 and is now at 3 percent in July, after being as low as 1.5 percent in December 2024.

Forward Outlook and Forecast

Inflation has increased somewhat during the summer, and the CPIF is now above the Riksbank's 2 percent target. Despite this, the Riksbank has chosen to wait before making further interest rate changes. If inflation continues to rise, an increase could be considered later, but much depends on price developments in food, energy, and fuel. For households, today's decision means stable borrowing costs in the short term, but continued uncertainty about future rate changes if inflation does not ease.

Frequently Asked Questions about the Key Rate

• What is the key interest rate?
  The key interest rate, or repo rate, is the rate that the Riksbank charges when banks borrow or deposit money with the Riksbank in the short term.
• How does the key interest rate affect mortgage loans?
  When the key rate changes, it impacts banks' costs, which often leads to increases or decreases in mortgage rates.
• How often does the key rate change?
  The Riksbank decides on the key rate approximately five to seven times a year but can make additional decisions if needed.
• What influences the Riksbank's rate decisions?
  Decisions are primarily based on inflation development, but also consider factors like the labor market and economic activity.
• How does the key rate influence inflation?
  A higher key rate typically dampens inflation by making borrowing more expensive, while a lower rate can stimulate the economy.