Swedens Policy Rate

Riksbank's Decision: Policy Rate Reduced to 1.75 Percent

The Riksbank has announced that the policy rate will be lowered from 2 percent to 1.75 percent starting October 1, 2025. The decision comes after a period of stable interest rates and a slight rise in inflation.

Today's Interest Rate Announcement

On September 23, 2025, the Riksbank announced that the policy rate, also called the repo rate, will be decreased by 0.25 percentage points – from 2.00 percent to 1.75 percent. The new rate will take effect on October 1, 2025. The decision is justified by inflation, measured with KPIF, remaining slightly above the target but developing steadily. The Riksbank assesses that a lowered rate can support the economy without risking price stability, especially as underlying inflation (CPI) remains low.

Impact on Households

The policy rate quickly influences banks' lending rates. For households with mortgages, the rate typically sits about 1 percentage point above the repo rate, while personal loans are often around 2.5 percentage points higher. With the new repo rate of 1.75 percent, this means that:

• Typical mortgage rate: approximately 2.75 percent
• Typical personal loan rate: approximately 4.25 percent

For a mortgage of 1 million SEK, a reduction from 3.00 percent (with a previous repo rate of 2.00 percent) to 2.75 percent results in an annual interest cost decrease of about 2,500 SEK, or just over 200 SEK per month. For a 3 million SEK loan, savings amount to roughly 7,500 SEK annually, and for 5 million SEK, approximately 12,500 SEK per year.

Those with personal loans see less change in kronor, but even here, the rate cut has a noticeable effect on monthly costs.

History and Development

Over the past year, the Riksbank has gradually lowered the policy rate from a peak of 3.5 percent in September 2024. After swift reductions in autumn 2024 and spring 2025, the repo rate has remained at 2.0 percent since June 2025. Today's announcement of another cut is the first in several months and reflects cautious optimism regarding inflation development.

Inflation, measured with KPIF, has risen from 1.2 percent in August 2024 to 3.2 percent in August 2025. However, CPI inflation has been significantly lower, indicating that underlying price pressures remain moderate.

Outlook and Forecast

The Riksbank signals continued vigilance regarding inflation. KPIF has increased slightly over the summer, but CPI inflation remains around 1 percent, suggesting limited upward pressure on consumer prices. If inflation continues to develop steadily, further adjustments to the repo rate may happen gradually.

For households, this means mortgage rates and personal loan rates may remain low in the near term. Food and energy prices are expected to be affected marginally in the short term, but a lower rate could dampen cost increases if inflation is kept in check.

Frequently Asked Questions About the Policy Rate

• What is the policy rate?
  The policy rate, or repo rate, is the interest rate that the Riksbank charges when banks borrow or deposit money with the Riksbank over the short term.
• How does the policy rate affect mortgages?
  Mortgage rates often follow the policy rate with a markup, typically around 1 percentage point.
• What guides the Riksbank's decision on the rate?
  The Riksbank sets the rate based on the inflation target and the economic development in Sweden and abroad.
• How often is the policy rate changed?
  The rate is usually reviewed at the Riksbank's monetary policy meetings, about five to six times per year.
• How is the policy rate related to inflation?
  The rate is used to influence inflation, aiming to keep it close to the Riksbank's 2 percent target.