The Riksbank kept borrowing costs unchanged for a twelfth consecutive month while indicating that the likelihood of a rate increase this year has grown as the economy recovers.

The Swedish central bank held its key rate at 1.75% on Thursday, the lowest level in the European Union. All 18 economists surveyed by Bloomberg had predicted this outcome.

Policymakers led by Governor Erik Thedéen said in a statement that "for inflation to stabilize around 2%, the policy rate should be raised more than projected in June."

Officials also said that if the outlook for inflation and economic activity holds, the policy rate will begin to be raised this year. In August they had said there was a 50% chance of a 25 basis point hike in 2026.