Central banks shift course: Sweden hikes, Malaysia seen holding

· Finance · Sweden · Malaysia

Sweden's central bank raised its key interest rate for the first time since the start of the war between the US and Iran, and signaled more increases in borrowing costs were likely. Separately, Malaysia's central bank is expected to keep rates unchanged at its final policy meeting of the year on Thursday while signaling scope for a hike early in 2027, as economic growth remains strong. The two moves illustrate how the oil shock from the Middle East conflict is pushing some central banks toward tightening even as others stay on hold, with rate paths now hinging on energy prices and war risk rather than domestic demand alone.

Why it matters：With war-driven energy costs feeding inflation, central banks are diverging, a shift that will move currency, bond and credit markets well beyond these two economies.

Key points

  • Sweden's hike is its first since the US-Iran war began
  • Malaysia is expected to hold on Thursday and signal a possible 2027 hike

Sources (original reporting)

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