Prospects for the Nordic and Swiss economies’ are fairly good, with Sweden and Iceland likely to be the best performers. But the outlook for inflation, and therefore monetary policy, varies substantially. The Swedish economy is firing on all cylinders, and inflationary pressure is building. As a result, we still think that the Riksbank will start to tighten monetary policy at the end of this year – sooner than investors currently expect. By contrast, weak underlying inflationary pressures in Switzerland and Norway look set to force their central banks to maintain an extremely supportive monetary policy stance for the foreseeable future. Nevertheless, we think that each of these countries’ currencies will strengthen this year. In Sweden, this will be driven by tighter monetary policy. Meanwhile, rising political risks in the euro-zone will put upward pressure on the Swiss franc. And finally, rising oil prices will cause the Norwegian krone to appreciate.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services