Weak growth in the euro-zone overshadows near-term prospects in Switzerland and the Nordics. We expect activity to slow in most countries this year and to stay sluggish in 2020. As a result, price pressures should generally remain subdued, prompting central banks to leave interest rates low for longer, or even cut them further in the case of Denmark. Meanwhile, if the ECB eventually re-starts QE, as we think likely, the resulting upward pressure on the Swiss franc will make life uncomfortable for the SNB. The exception is Norway, where the Norges Bank is a rare example of a central bank in tightening mode. A pick-up in oil investment will support growth this year. But if our forecast for oil prices to fall proves accurate, we think that the Bank will call a pause in its tightening cycle and leave rates on hold in 2020.
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