Minutes from the Monetary Policy Meeting on August 19, 2026

Monetary Policy Minutes August 2026

Postal address: 103 37 Stockholm, Visiting address: Brunkebergstorg 11 Telephone: 08-787 00 00, Web: riksbank.se MONETARY POLICY MINUTES Board of Directors no. 5 DATE: 2026-08-19 MEETING TIME: 09:00 Monetary Policy Minutes for Meeting no. 22 2026 HANDLING CLASS: O P E N PRESENT: Erik Thedéen, Chairman Aino Bunge Per Jansson Anna Seim Göran Hjelm

Bo Broman, Chairman, Riksbank General Council Tomas Eneroth, Vice Chairman, Riksbank General Council

Jakob Almerud Lena Arfalk Alexander Czarnota Charlotta Edler Mattias Erlandsson Caroline Flodberg Susanna Grufman Matilda Kilström Ellen Kockum Henrik Lundvall David Lööv Hilkka Nyberg Åsa Olli Segendorf Annica Sandberg Olof Sandstedt Anna Sjulander Frida Widholm Anne-Catherine Worth

Buster Carlsen (§1-3a) Maria Johansson (§1-3a) It was noted that Alexander Czarnota, David Lööv and Frida Widholm shall keep the monetary policy minutes.

3 §3 Monetary Policy Review §3a Economic Developments Market developments since the last monetary policy meeting Buster Carlsen, market economist at the Markets Department, began by reporting on developments in financial markets since the last monetary policy meeting in June. Geopolitics continues to be a dominant theme in financial markets. Passage through the Strait of Hormuz is once again restricted, but not completely blocked, after the initial relief that followed the declaration of intent signed in June. The oil price has risen since the monetary policy meeting in June, and futures prices are now at approximately the same level as when the Riksbank made its forecasts in June. Restricted accessibility and refining capacity, partly due to outages and damage to Russian facilities, have also contributed to rising prices for refined oil products. Furthermore, the extreme drought in Europe has created supply disruptions, partly due to lower water levels in the Rhine River, which has led to significant consequences for barge traffic. At the same time, several factors have limited the rise in crude oil prices. In addition to redirected exports, primarily via Saudi Arabia, China's reduced crude oil imports, among other things, have been a clear contributing factor. Global government bond yields with longer maturities have risen, with a particularly clear steepening of the US yield curve. This development is primarily explained by concerns about many countries' public debt in combination with continued large issuance volumes, which means that the supply of government securities is large. The growing supply of corporate bonds in both the US and Europe, partly to finance the extensive AI expansion, is also a contributing factor. The Federal Reserve's decision to leave the policy rate unchanged in July, in combination with continued subdued inflation outcomes, has led the market to question whether any rate hikes in the US will occur in the near term. The Japanese yen strengthened significantly after the US and Japan conducted a coordinated currency intervention for the first time in 15 years. The market interpreted this as the US wanting to prevent Japan from selling US government securities to finance interventions. In addition to large movements in the Japanese currency, volatility in the foreign exchange market has generally been low during the summer. Broad stock indices have reached new record levels in both the US and Europe during the summer. Renewed concerns about the extent of AI investments, partly after China's launch of a new language model, as well as fears related to the financing of increased capital investments, have contributed to significant fluctuations in stock prices within AI-related sectors.

4 The South Korean market index (KOSPI), which is an important indicator for global AI trade, has fallen sharply during the summer. This has led local authorities to introduce measures to limit trading in leveraged products for private investors. Analysts and the market expect an unchanged rate at today's monetary policy decision. However, market pricing has shifted higher since the June decision and now prices in just over a quarter percentage point rate hike towards the end of 2026. The krona, measured by the KIX index, has weakened slightly since the June decision. Several analysts point out that a continued weakening of the krona in combination with the ECB expected to continue raising its rate could be a reason for the Riksbank to pursue a tighter monetary policy going forward. Financial stability – current situation and risks Olof Sandstedt, Head of the Financial Stability Department, reported on the situation in the financial system. The risks to financial stability in Sweden have been elevated for a long time. This is linked to the uncertain global situation, not least the unpredictable trade and foreign policy of the US administration, as well as the war in the Middle East. New attacks on vessels passing through the Strait of Hormuz and infrastructure have caused continued supply disruptions and volatile energy prices. The Swedish financial system has so far shown resilience, and important financing markets and infrastructure have functioned well. At the same time, the continued risk picture is highly influenced by how the conflict develops and how long-lasting the effects of the supply disruptions are expected to be. Long-term government bond yields have continued to rise during the summer and are at high levels in several countries, partly due to deteriorating public finance prospects. Public interest expenditures in several countries are now at historically high levels as a share of GDP, further increasing budget deficits. At the same time, risk-taking in financial markets remains high. Risk premiums on several financial assets have decreased and are at low levels, which increases the risk of rapid and broad corrections in asset prices and increased volatility in financial markets. Supported by the prevailing high asset valuations, several large AI-related companies have also chosen to raise new capital in global financing markets, primarily through increased debt financing, which has further increased market concentration to these companies. Despite the unrest over the summer, the assessment is that Sweden is well equipped for a deteriorating economic situation, and that the Swedish financial system as a whole has good conditions to withstand and manage disruptions. The major Swedish banks are profitable and have good margins down to capital and liquidity requirements, and thus the conditions to maintain lending to the real economy even in the event of a disruption. However, threats related to cyberattacks have increased against the backdrop of rapid technological development and the uncertain security policy situation. This underscores the need for strengthened operational preparedness among all central actors in the financial system.

5 The current monetary policy preparation Jakob Almerud, Senior Economist at the Monetary Policy Department, reported on the current assessment of macroeconomic developments and the proposal for a monetary policy decision that the Monetary Policy Department believes will gather a majority of the Executive Board at today's meeting. The basis for today's interest rate decision was discussed with the Executive Board at preparatory meetings on August 10 and 11. The draft monetary policy update was discussed at the preparatory meeting on August 13. At the monetary policy meeting in June, the Riksbank left the policy rate unchanged at 1.75 percent. The monetary policy preparation process was then strongly influenced by the war in the Middle East. The Riksbank assessed that the risk of inflation becoming too high had increased, but since inflation was low and the economy was weak initially, there was some room to await a clearer picture of the development of the war and its effects on the Swedish economy. In the preparation for today's monetary policy decision, key questions have been whether the Swedish inflation and economic outlook from June still holds, and whether the risk picture has shifted in any particular direction. The focus has been partly on the effects of the supply disruptions following the war, and partly on the development of the domestic economy. Despite June's declaration of intent between the US and Iran, the war in the Middle East has continued during the summer. Information received since then, including about indices of global supply disruptions and price developments for oil, urea, and aluminum, suggests that the economic effects of the war have so far been less than initially feared. But since the war is still ongoing, the underlying cause of the supply disruptions remains, and the risk of inflation becoming too high persists. In financial markets, long-term interest rates have risen during the summer. In Europe, this development has likely been driven primarily by expectations of higher short-term rates. In the US, it is probably mostly due to higher term premiums, which may, among other things, reflect increased uncertainty about inflation and weak public finances. The krona, measured as the KIX index, is slightly weaker than at the monetary policy meeting in June. Regarding domestic economic developments, preliminary statistics show that the economy developed stronger than expected during the second quarter. Furthermore, the Business Tendency Survey shows that both household and business confidence has risen. Industrial orders have also increased during the summer. Taken together, this suggests a somewhat stronger domestic economy, both initially and going forward. However, this picture is not yet reflected in the labor market, which has developed somewhat weaker than expected during the summer. Inflation, measured as CPIF and CPIF excluding energy, was 0.2 and 0.3 percentage points higher in July, respectively, than in the June forecast. A large part of the forecast error was due to unexpectedly rapidly rising prices for travel-related services. It is not uncommon for the prices of these services to vary greatly. The measured inflation is low, but this is mainly due to the direct effects of temporary fiscal measures.

6 Excluding these measures, CPIF inflation was 2.2 percent, while CPIF excluding energy was 1.6 percent. Companies' price plans according to the Business Tendency Survey have softened somewhat but are still at an elevated level. Overall, the inflation and economic outlook largely holds. However, uncertainty surrounding the outlook continues to be high. In addition to the war in the Middle East, there are several other risks that could affect the inflation and economic outlook. It also cannot be ruled out that the effects of the war could be amplified by other more underlying vulnerabilities in the global economy. The monetary policy proposal that the Monetary Policy Department believes will gather a majority of the Executive Board at today's meeting is described in Appendix A to the minutes. The proposal means that the policy rate is left unchanged at 1.75 percent. The probability that the policy rate will be raised this year remains. §3b The Economic Situation and Monetary Policy Deputy Governor Anna Seim I support the proposal to leave the policy rate unchanged at 1.75 percent. I also endorse the assessments in the draft monetary policy update. The war in the Middle East has now been ongoing for almost six months and has led to increased global cost pressure via higher energy, raw material, and freight prices. Swedish media conveys a picture of very low Swedish inflation, but the fact is that, adjusted for the direct effects of the temporary fiscal measures which, among other things, aim to compensate households for the aforementioned supply disruptions and which we have consistently communicated that we will look through, inflation in terms of our target variable CPIF is 2.2 percent and CPIF excluding energy is 1.6 percent. Furthermore, inflation has risen rapidly since the war broke out. Data on the more underlying inflation over the past three and six months, reported in Diagram 11 in the draft update, indicates a clear upward momentum. As stated, I am still concerned that inflation will be too high. It is difficult to imagine a lasting solution to the war in the Middle East in the near future. Negotiations for a peace agreement sometimes seem to be ongoing, but the events during the summer have confirmed something we also discussed at the monetary policy meeting in June – that the situation is fragile and the process has been characterized by many setbacks. There are also several other external factors that risk increasing inflationary pressure going forward, for example, the extreme weather in parts of Europe and Russia's war of aggression in Ukraine. Despite this, I advocate an unchanged policy rate today. The oil price and some raw material prices have fallen back during the summer, even though traffic through the Strait of Hormuz has been restricted. The world economy has thus, just as when tariffs were initially raised, proven to be remarkably resilient. There are two dimensions to this resilience. One is that the oil stocks used during the crisis are not inexhaustible, and their use is therefore a kind of artificial respiration that is not sustainable in the long term. But the other is that companies seem to have adapted to the situation and thereby made global value chains more robust. It is difficult to form an opinion on how extensive and elastic this adaptability is, and whether it has come at the cost of something else. But it raises some hope that the world economy has approached an equilibrium where dependence on the Strait of Hormuz is somewhat less. If so, cost-driven inflationary impulses could subside going forward, even if the war in the Middle East continues.

7 One circumstance that instead suggests that Swedish inflation may accelerate going forward is that supply disruptions are now interacting with a significantly stronger economy than before. At our meeting in June, I argued that the strength of demand is of great importance for the inflation effects of a supply disruption because it determines the extent to which costs can be passed on to consumers. And if companies, in the wake of a series of cost shocks, raise prices more often, the Phillips curve becomes steeper, so that a given increase in economic activity can have greater inflation effects. Preliminary statistics now indicate that GDP developed significantly stronger than expected during the second quarter, while household confidence indicators have strengthened and consumption is steadily growing. The fact that we are now approaching normal resource utilization, which with fiscal policy as a catalyst can strengthen further, is a crucial difference compared to before. My assessment is therefore that it may be necessary to raise the policy rate during the autumn. At our meeting in May, I argued that a timely tightening can reduce the risk of us having to raise more forcefully later, and I naturally stand by that statement. As always, we must be forward-looking in our decisions. Given that we are now facing unforeseeable fiscal policy consequences of the Swedish parliamentary election, a US midterm election in November, and also have to manage the consequences of the serious global situation, this is a delicate task. When we return with full forecasts and a monetary policy report in September, we will continue to work with carefully designed scenarios that describe possible paths forward through this large outcome space. We are, as always, highly prepared to adapt monetary policy if it proves justified. First Deputy Governor Aino Bunge I support both the proposal to leave the policy rate unchanged at 1.75 percent at this meeting and the assessments made in the draft monetary policy update. It has been a summer with continued focus on the Middle East and the war, which unfortunately has not yet approached a long-term sustainable solution. But as described in the draft update, the economic consequences of the war and the subsequent supply disruptions have so far been less than feared. The latest monthly report on the oil market from the International Energy Agency (IEA) indicates that higher prices have not only created strong incentives to adjust supply but have also led to demand decreasing more than previously estimated.1 The use of oil stocks, increased production in other countries, alternative transport routes, and significantly reduced demand from, among other places, China have had a dampening effect on the oil price. At the same time, risks remain both for the conflict to escalate and for the indirect effects to be more extensive than we have calculated. Even though we still live in a world characterized by war and very uncertain geopolitical conditions, companies, as during last year's tariff turbulence, have shown an almost surprisingly great adaptability. We also see that indicators of disruptions in global supply chains have fallen (see Diagram 2 in the draft update). Overall, this leads me to the following conclusion: while the monetary policy discussion in late spring was almost entirely focused on the continued course of the conflict and its economic effects, we now need to focus more on domestic economic developments and 1 See Oil Market Report - August 2026 – Analysis - IEA.

8 other factors. There are many other external factors bubbling beneath the surface, which I will return to shortly. But let me start with inflation in Sweden. And there, I think the picture going forward is

11 significant damage to production and distribution from the area, and partly a risk of a more prolonged, low-intensity conflict leading to limited goods deliveries. Compared to when we made the decision in June, when the declaration of intent between the parties was newly signed, I assess these two risks as greater at present. However, developments in recent months have also brought several positive signals for monetary policy. The overall picture is that the effects of the war have become significantly smaller than what statistics and indicators showed during the spring and what several analysts feared. The price of several raw materials has fallen back, although the level in several cases is still elevated. As a result, Swedish import prices fell by a total of approximately 2 percent in May and June after increasing by almost 9 percent in March and April. 4 Regarding indicators, companies' price plans for input goods, according to several sources, have fallen from almost two standard deviations above normal to clearly below one standard deviation. 5 A corresponding decline has also occurred for the global index for supply chain disruptions (see diagram 2 in the draft update) which I have mentioned in previous minutes. This is particularly positive as sharp increases in such measures have been shown to entail not only significant indirect effects but also second-round effects on inflation. 6 Regarding the risk of second-round effects more generally, I assess it as limited based on developments so far. Inflation expectations are anchored around the target, wage formation is expected to be based on the inflation target, and, given the design of the fiscal policy framework, there is no scope for broad, demand-stimulating stimuli in the coming years. Turning to the Swedish economy and inflation. The Swedish economy has continued to strengthen, and various measures of resource utilization are approaching normal levels. In addition, indicators show that a further strengthening in the near term is likely. The economic upturn over the past year has also been broad, so far with some exception for the construction sector, but several forward-looking indicators are now positive there. Regarding the labor market, companies experience less labor shortages than normal. In addition, unemployment is elevated even in groups that are comparatively close to the labor market. Overall, this suggests that there is an opportunity for a further increase in resource utilization as the labor market responds to continued increased demand for goods and services. Regarding the inflation outlook, outcomes and indicators since the June meeting present a relatively multifaceted picture. The short story is that inflation has been higher than forecast while several forward-looking indicators have been dampened in line with 4 According to the Import Price Index from PPI (Producer and Import Price Index, Statistics Sweden). 5 Business Tendency Survey (Price plans, input goods) and PMI (Price plans, input goods in industry). 6 See Baslandze, S and S Fuchs (2026), “The price of delay: Supply chain disruptions and pricing dynamics”, Journal of International Economics, forthcoming.

12 the effects of the conflict becoming smaller than expected. I particularly want to highlight the importance of how inflation outcomes are interpreted. When the credibility of the inflation target is high, monetary policy has the freedom to disregard temporary variations in inflation in the short term, with the aim of achieving more stable real economic development and avoiding volatility in the policy rate. This is the reason for normally disregarding variations in energy prices and currently also disregarding effects from temporary fiscal policy measures. This underlying measure now amounts to 1.6 percent year-on-year, i.e., below but quite close to 2 percent. What could be more worrying is that the development of this measure over the past three months is almost 4.5 percent in annualized terms, i.e., a sign of strong so-called momentum for inflation. However, the absolute lion's share of this price increase, including the Riksbank's forecast error, is due to unusually large price increases for travel-related services, which can be expected to moderate in the coming months in line with how it has looked in recent years. If travel-related services are excluded, the three-month rate is only just under 1.5 percent, which, compared to 4.5 percent, gives a completely different picture of “momentum”. This does not mean that one should easily choose to disregard certain components of measured inflation. At the same time, it is important to form an opinion of what the latest price development may indicate for future inflationary pressure. In that analysis, I do not think one should completely disregard the large price increases in travel-related services, partly because I assess that they are to some extent due to indirect effects from increased energy prices. Turning to the risk picture. I believe it remains asymmetric, where the risk of inflation being too high dominates. This is essentially due to the war in the Middle East and the risk of sharp price increases in the event of an escalation, as I described above. I also assess that there is a risk that indirect effects this year and next year from the disruptions the war has brought so far will be greater than we have calculated, especially if resource utilization were to rise significantly more than in the June forecast. Going forward, it will therefore be important to analyze how much of inflation, both in terms of outcomes and forecasts, may be due to direct and indirect effects of supply disruptions. What does this mean overall for monetary policy? Given the latest developments in the Middle East, I think it is appropriate to start thinking about monetary policy in a scenario where the conflict becomes prolonged and low-intensity and where consideration of a possible future escalation is no longer reasonable. For some time, the policy rate path has slowly adjusted towards the midpoint of the Riksbank's assessed interval for the neutral policy rate in the long term. I think this is a reasonable starting point, but two circumstances are important to emphasize. The first is that the appropriate policy rate level in the short term to achieve nominal and real stability may differ from the assessed neutral level in the long term, especially if factors exogenous to monetary policy temporarily deviate from normal,

13 for example, regarding external demand, the direction of fiscal policy, or major exchange rate movements not caused by relative monetary policy. The second circumstance is that the assessment of the interval for the neutral policy rate in the long term, and especially its midpoint, is surrounded by significant uncertainty. These two circumstances contribute to the difficulty in assessing whether the current policy rate level has an expansive effect on the economy or not. One indication is that resource utilization has increased, not least since the current interest rate level was decided in September 2025. At the same time, it is reasonable that the rapid interest rate reduction from 4 to 1.75 percent has itself clearly contributed to the economic upturn through several channels. With this said, my, albeit uncertain, assessment is that the current policy rate level is somewhat expansive, partly because households, which on average have high interest rate sensitivity, have continued to increase consumption at a relatively good pace, and because the interest-sensitive construction sector appears to be developing relatively strongly going forward. But even if future developments gradually align with the June forecast, we have a “time of trials” ahead of us regarding monetary policy. By this, I mean that we must proceed cautiously and carefully analyze what effect the current policy rate and interest rate path fundamentally have on the economy's development. Linked to the current situation, I think it is appropriate that the policy rate remains slightly expansive, which I thus assess the level of 1.75 percent to be. Thanks primarily to available resources in the labor market, there is an opportunity to expand the economy further without resource utilization posing any significant risk of excessively high demand-driven inflation. However, higher resource utilization than in the June forecast would increase the risk of increased supply-driven inflation in the form of greater indirect effects from Middle East-related disruptions. As I have stated before, the latter does not necessarily warrant a tighter monetary policy, as it is appropriate to look through some supply-driven inflation when other circumstances make this possible. Similar to June, I believe that the risk of escalation of the war with sharp price increases as a consequence justifies a probability of an interest rate hike during the year. I view the increase in the interest rate path in June as a response in terms of expectations based on the probability of escalation multiplied by the effects it could have. If an escalation were to materialize and lead to large price effects, it could entail significantly larger interest rate hikes than what the interest rate path from June implies, which was illustrated in a scenario in our June report.

Vice Governor Per Jansson I support the economic and monetary policy assessments presented in the draft monetary policy update. This means that I support the proposed decision to leave the policy rate unchanged at 1.75 percent and the

14 communication regarding future monetary policy made in the draft update. At our monetary policy meeting in June, I described the Swedish inflation picture as favorable and expressed skepticism towards so-called insurance rate hikes, which I only saw a need for if one feared that the inflation target had a credibility problem. The background to my optimistic view of the inflation picture in Sweden was a good starting point given the prevailing inflation level and inflationary pressure, that a relatively weak economic situation meant that the risk of rapidly and sharply rising demand-driven inflation was small, and that supply disruptions at the time of our June meeting had not brought about any remarkably large inflation effects. The picture also included that some progress in peace negotiations between the USA and Iran could be noted just before our meeting. In my statement here today, I intend to update my view on these various aspects and circumstances. Since the June meeting, we have received new inflation outcomes for June and July. For both these months, the outcomes, both with and without energy prices, were higher than expected. The largest forecast error concerned inflation excluding energy prices in July, where our forecast was 0.2 percent but the outcome landed at 0.6 percent. For inflation including energy prices, the July outcome was 0.7 percent, compared to a forecast of 0.5 percent. Adjusted for the direct effects of temporary fiscal policy measures, which we strive to look through in monetary policy, the corresponding figures for inflation with and without energy prices were 2.2 and 1.6 percent, respectively. For me, this continues to constitute a fairly good starting point overall. One circumstance that somewhat clouds the picture of a favorable starting point for Swedish inflation is that various measures of shorter-term price changes have increased significantly in June and July. In July, for example, price increases, adjusted for energy prices and temporary fiscal policy measures, in annualized terms over the past six months amounted to well over 2 percent. Looking at the development over the past three months, corresponding price increases were almost 4.5 percent. This should therefore be compared with 1.6 percent according to the usual twelve-month change. That the increase in shorter-term price change measures is largely a result of rising prices for travel-related services may suggest that it is temporary. These prices tend to vary a lot, and in this case, it appears that certain service prices that usually increase a lot during the summer months rose particularly quickly this year. But it cannot be ruled out that at least some of the increase in these price changes is related to unexpectedly large indirect price effects of supply disruptions, for example, due to sharply rising prices for jet fuel. If this is the case, it is possible that the increase will prove to be more persistent.

15 With this, I turn to the economic situation and the risk of rapidly and sharply rising demand-driven inflation. According to new monthly statistics from Statistics Sweden, GDP increased significantly faster than expected in the second quarter, both compared to the first quarter and compared to the second quarter of last year. Measured as seasonally adjusted quarterly growth, the GDP increase amounted to 1.4 percent, compared to a forecast of 0.9 percent in the monetary policy report from June. Several indicators now suggest that the economy is close to a normal business cycle situation and that the economy will continue to strengthen going forward. However, it is hardly the case that one needs to worry about the economy overheating soon. Against this speaks the fact that growth, after all, does not appear to be unhealthily fast and that developments in the labor market are rather sluggish. But at the margin, it is still difficult not to conclude that the risk of slightly faster demand-driven inflation has now increased. One contributing factor here is that fiscal policy is unusually expansive and that, in light of the election promises made recently, there is a risk that it will become even more expansive in the future. That so much of the implemented and announced measures concern short-term support for households rather than efforts to raise the economy's long-term growth potential is also not an advantage in this context. Regarding supply disruptions, it can be noted that the progress in peace negotiations between the USA and Iran made just before our monetary policy meeting in June has not been lasting. Some kind of dialogue still seems to exist between the parties, but the formal ceasefire ended on Monday, and the declaration of intent signed on June 17 must unfortunately, at least for the moment, be considered obsolete. Despite this, the effects on the oil market during the summer months have been limited. It is clear that adaptability in terms of both supply and demand has been greater than previously thought. The loss of oil exports through the Strait of Hormuz has been compensated by the use of inventories, increased production elsewhere, alternative transport routes, and significantly reduced demand, primarily from China. The increased adaptability has for the moment meant that the impact of supply disruptions on global value chains has decreased considerably. But it is important to emphasize that this is a momentary picture and that some of the factors that have enabled markets and companies to adapt will not last forever. This applies perhaps above all to the use of inventories and China's sharp reductions in its oil imports.

16 That it is currently impossible to see how to find a way forward towards a sustainable peace, with acceptable conditions for both the parties themselves and the rest of the world, is deeply worrying against this background. The situation is naturally not improved by the fact that there are also serious supply disruptions elsewhere than in the Middle East, for example in Russia and Ukraine, and in countries affected by extreme weather with drought and fires as a consequence. Let me summarize the conclusions for the inflation picture and monetary policy that I draw from this review. Regarding the new inflation outcomes since our last meeting, my conclusion is that the starting point is still largely good, but that there has been a certain shift in a worse direction. The same applies to the risk of us getting higher demand-driven inflation. Regarding supply disruptions, there are both positive and negative aspects to report. But what worries me most right now is that no path towards a sustainable peace can be seen at all. Overall, against this background, I assess that the inflation picture today is somewhat worse than it was in June. But it should be emphasized that the shifts are small. As I perceive it, for the moment they have more of an impact on the communication regarding the risks for future inflation development than a direct quantitative effect on our monetary policy plan, in line with the wording in the draft update. That I continue to be skeptical of insurance rate hikes also has some significance in this context. There is strong confidence in our inflation target, well illustrated by both longer-term inflation expectations and how labor market parties conduct wage formation. We therefore have room to wait to adjust monetary policy even if there are some risks of elevated inflation ahead. However, we should, just as we are doing now, clearly communicate in advance that we will not hesitate to act if it is clear that a larger inflation problem is about to arise. Should we, with this way of conducting monetary policy, fall a little “behind the curve”, I have good hope that with some early interest rate hikes in larger steps than the usual 0.25 percentage points, we can relatively quickly get monetary policy back in line with developments.

Governor Erik Thedéen I support the proposal to leave the policy rate unchanged at 1.75 percent today and I endorse the assessments made in the draft monetary policy update.

During the summer, the economic upturn has strengthened, and at the same time, we have noted unexpectedly high inflation outcomes. Swedish companies report that demand and profitability have risen recently, and we have also received reports during the summer of strong order intake in the manufacturing industry. I am becoming more and more convinced that the economic upturn is now on firmer ground.

17 More positive growth signals are also coming from the euro area, and in financial markets, interest rates on both foreign and Swedish long-term loans have risen significantly. This can be interpreted as market participants expecting higher future policy rates as a result of stronger growth prospects. US long-term rates have also risen, but a possible interpretation there is that large public deficits and some uncertainty about how the Federal Reserve will act may have contributed. The US yield curve has also become significantly steeper, which strengthens such an interpretation. The low inflation that has been noted in Sweden during the summer receives a lot of attention, but the decline was in fact smaller than we and several other forecasting institutes had expected. Several temporary fiscal policy measures, such as the reduced VAT on food, currently contribute to holding back the measured rate of price increase. It therefore deserves to be re-emphasized how important it is now to exclude the effects of these measures to get a more accurate picture of the underlying inflationary pressure. Measured in this way, CPIF inflation in July was 2.2 percent, and the same measure excluding energy noted 1.6 percent. And that is clearly higher than our forecasts from June. But it must be said that one explanation for the higher inflation outcomes is high travel costs, which tend to vary greatly between individual months. Assessing the strength of underlying inflationary pressure is difficult and is generally complicated by the fact that the world economy has been affected by several strong supply disruptions in recent years, most recently those linked to the war in the Persian Gulf. The effects of the disruptions on corporate costs, household demand, and consumer prices are uncertain. When inflation develops in an unexpected way, as has now happened during some summer months, it is often difficult to quickly ascertain to what extent it is due to temporary disruptions, more lasting changes in supply, or higher demand. When I have considered the inflation risks going forward, I have tried to look at similarities and differences compared to the situation about a year ago. In the spring of 2025, the USA had announced sharp tariff increases against the EU and a number of other countries, and growth had also slowed down, both globally and in Sweden. We were also worried then by high inflation outcomes, and it was unclear to what extent it was a matter of temporary or more lasting increases in the rate of price increase. But we assessed that the increase was probably temporary and that it would soon fall back. We believed that the economic recovery needed support and, based on our strategy of forward-looking monetary policy, chose to lower the policy rate by a total of half a percentage point. The cost increases caused by the supply disruptions then did not lead to broad price increases.

18 A reasonable interpretation is that the comparatively low household demand was one of several factors that contributed to inflation impulses not spreading. Today, there is similar uncertainty about the effect of various supply disruptions on consumer prices. So far, we see no clear signs of a lasting, broad increase in inflation, neither in Sweden nor among our most important trading partners. Several measures of price pressure and supply disruptions also indicate that the effects of the war in the Middle East have so far been milder than what could have been feared this spring. But the conflict around the Persian Gulf continues, albeit with varying intensity. Some temporary measures, such as China's reduced import of petroleum products, have helped to dampen the rise in oil prices. At the same time, limitations in crude oil refining capacity remain, and in Europe, the price of natural gas is still approximately twice as high compared to the level at the turn of the year. Global market prices for diesel and petrol are also high. Supply disruptions, especially in the oil and gas-related markets, therefore remain an inflation risk. In addition, this summer's extreme heat in parts of Europe has created problems; this includes drought which complicates both transport on Europe's rivers and the cooling of several nuclear power reactors. In short, there is still a risk of upward pressure on companies' costs. Inflation outcomes have been higher, and it cannot be ruled out that part of the increase may be due to a combination of rising energy prices and relatively good demand as a result of stronger economic development. The Swedish economy is now moving at a relatively fast pace towards normal resource utilization. This means that the supply disruptions we are now experiencing are occurring in an economy characterized by good demand. I therefore assess that the risk is now greater that inflation impulses from war, drought, and temporary bottlenecks will give rise to second-round effects in the form of broader price increases. Stronger growth also means that last year's arguments for a lower interest rate – which largely concerned the weak economy – no longer apply. My conclusion is that vigilance against rising inflation must be high. But the risks of higher inflation are far from unambiguous. There are still available resources in the economy, and it may be that economic growth picks up without a clear impact on the labor market in the near term. If this condition becomes prolonged, productivity rises, and growth can be high for a longer period without inflation risks increasing. The traditional pattern during an economic upturn, however, is that demand for labor increases with some delay, which through various channels can eventually lead to increased inflation risks. When growth starts, it is usually uncertain at first how long this lag in the labor market will

19 be and what the final effect on inflation will be. There is simply great uncertainty here, and we must follow developments closely. Today, uncertainty is accentuated by the growing use of AI, which could imply entirely new patterns in the otherwise reasonably stable relationships, across the business cycle, between growth and demand for labor. How then are my monetary policy considerations affected by the new information we have received during the summer? The increasingly positive economic signals imply an increased risk that high energy costs, caused by the war and weather-related disruptions, could take hold and lead to a broader increase in inflation. Against this background, I assess that our next change in the policy rate needs to be an increase. It will be central to continuously analyze the continued effects of high energy prices, the strength of the various drivers affecting growth, and how companies' demand for labor develops. The wind has picked up and the speed has increased, and with that, the risks also increase somewhat. The next step will be to reduce the sail area, but the timing for that is still uncertain.

20 §3c Discussion No subsequent discussion was held. §4 Monetary Policy Decision The Executive Board decided • in accordance with Protocol Appendix A Decision on the Policy Rate (including the appendix Monetary Policy Update). This paragraph was immediately declared adjusted. Recorded by Alexander Czarnota David Lööv Frida Widholm Adjusted by Erik Thedéen Aino Bunge Per Jansson Anna Seim Göran Hjelm

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