PurposeThis study empirically examines the nexus between central bank interest rates and profitability of commercial banks within the specific context of Sweden.Design/methodology/approachBank-level longitudinal panel data from 20 Swedish commercial banks over the period from 2007 to 2022 are analyzed using univariate and multivariate statistical techniques, including ordinary least squares (OLS), fixed-effects models and feasible generalized least-squares (FGLS) regression, to provide robust insights into the factors influencing bank profitability.FindingsContrary to common expectations, the result of this study shows no statistically significant relationship between central bank interest rate and banks profitability in Sweden. The findings of the three models indicate that the organization-level determinants such as persistent profitability, capital adequacy, size and revenue growth, are more important than the central bank interest in explaining profitability among Swedish banks.Originality/valueThe study expands our knowledge regarding the complexities of relationship between the central banks interest rate on banks' profitability particularly in the less investigated context of Sweden. The study is also notable as it finds no significant relationship between central banks interest rate and banks profitability, which may be attributed to the large database used as well as the inclusion of many organizational level variables.