Sweden’s seasonally adjusted unemployment rate fell to 8.0%, compared with an 8.8% consensus forecast. Employment was reported as unchanged, remaining at high levels.
The December and January readings point to positive revisions for both unemployment and employment rates. The data reduces the likelihood of a Riksbank rate cut in the first half of the year.
Labor Market Signals And Rate Cut Odds
In February, Sweden’s inflation expectations fell, especially for the one-year horizon. The one-year figure dropped to 1.4% from 1.5% in January.
The report states it was produced with the help of an artificial intelligence tool and reviewed by an editor.
We remember seeing this situation develop in early 2025, where a surprisingly strong labor market clashed with low inflation. That jobs data, with unemployment dropping to 8.0%, correctly signaled that the Riksbank would resist pressure to cut interest rates. The market was pricing in cuts, but the underlying economic strength suggested a more hawkish path.
That trend has largely continued into today, February 2026, as the labor market remains a pillar of strength for the Swedish economy. The latest figures from Statistics Sweden show the unemployment rate holding firm at a healthy 7.8% in January 2026, which is still robust by historical standards. This continued tightness in the job market provides the Riksbank with a solid reason to maintain its current policy stance.
Trading Implications For The Swedish Krona
Crucially, the inflation concerns from last year have now materialized into sustained price pressures. We have seen the CPIF inflation rate rebound from those lows, with the latest reading for January 2026 coming in at 2.1%, just above the central bank’s 2% target. This justifies the Riksbank’s decision to hold its policy rate at 3.75% through late 2025 and into this year.
Given this backdrop, SEK volatility may be underpriced, especially against currencies like the euro where the ECB is signaling a more dovish tilt. We see an opportunity in options that bet on continued SEK strength. The rate differential between the Riksbank and the ECB should support the krona in the near term.
Therefore, traders should consider buying SEK call options against the EUR, positioning for a further drop in the EUR/SEK exchange rate from its current level of around 10.95. Another strategy would be to sell out-of-the-money EUR/SEK call options to collect premium, betting that a strong Riksbank will cap any significant upside. The key is to structure trades that benefit from the Riksbank having little reason to cut rates before other major central banks.
The main risk to watch for in the coming weeks will be the upcoming March inflation data and forward-looking business sentiment surveys. Any unexpected sign of economic cooling or a sharp drop in inflation could cause the Riksbank to alter its hawkish tone. This would quickly unwind any trades based on a strong SEK.
