Filtered by Subscriptions: Nordic & Swiss Economics Use setting Nordic & Swiss Economics
A raft of economic data for Sweden published this week added to the evidence that its economy is slowing and, like most of Europe, heading for a recession this winter. The 1.3% fall in Statistics Sweden’s monthly GDP indicator in August was the biggest …
7th October 2022
The low level of inflation in Switzerland compared to the euro-zone mainly reflects smaller contributions from energy and food. But core inflation is lower too, helped by the exchange rate and structural factors. Accordingly, the SNB won’t need to have …
5th October 2022
Swiss inflation appears to have peaked The fall in the headline rate of inflation in Switzerland in September suggests that price pressures may have peaked there, which is consistent with the message from the latest business surveys. Meanwhile, the …
3rd October 2022
This week we got yet more data showing that economies in the region are slowing. Sweden’s Economic Tendency Indicator for September, published on Wednesday, plummeted and suggested that growth has abruptly stalled. (See Chart 1.) And other indicators …
30th September 2022
In what has proven to be an action-packed week for major central banks, those in the Nordics and the SNB kept their end up and delivered historically large rate rises. And more tightening is likely from all three before the year is out. The 100bp rate …
23rd September 2022
Following today’s 50bp increase, we think the Norges Bank is most likely to hike by 50bp again in November. But its tightening cycle will soon be over, with the policy rate peaking at around 3%. Today’s 50bp rate hike, taking the policy rate to a …
22nd September 2022
The Swiss National Bank is likely to follow today’s 75bp rate rise with further increases at its next couple of meetings to keep a lid on inflationary pressure. But we still think investors have got ahead of themselves in expecting the rate to peak at …
More tightening to come Even after today’s widely-expected 50bp rate increase by the Norges Bank, taking the policy rate to a 10-year high of 2.25%, the Bank has not finished tightening yet. The policy statement accompanying the rate hike said that “the …
SNB adds to the crop of bumper rate rises The Swiss National Bank continued its tightening cycle today, delivering a 75bp rate hike as we expected. Further rate rises are likely at the next couple of meetings, but we think that investors have got ahead of …
Even after raising its policy rate by 100bp today, the Riksbank signalled that its tightening cycle has some way to go. We expect another large hike at its final meeting of the year in November, perhaps by 75bp. Next year, the beginning of QT will ease …
20th September 2022
Not a lot appears to link electricity, hot drinks, furniture and eggs, but this week all four made it into Statistics Sweden’s CPI categories with the highest annual inflation rates in August. The message from this week’s inflation release for August …
16th September 2022
Next week, we expect the Swiss National Bank, Riksbank and Norges Bank to raise interest rates aggressively. The SNB and the Riksbank both look set to raise rates by 75bp, and we would not rule out a bumper 100bp from the latter. But the Norges Bank is …
15th September 2022
Consumer price inflation has continued to accelerate in Switzerland and across the Nordics, adding to the pressure on central banks to tighten monetary policy more aggressively. In Switzerland, headline inflation reached 3.5% in August, which is low by …
14th September 2022
Further rise in core inflation increases chance of 75bp hike The continued increase in inflation in August, with the core rate hitting its highest level since December 1991, will keep the Riksbank in hawkish mode. We had expected the Bank to raise its …
Other central banks to follow ECB’s lead The ECB isn’t the only European central bank in hawkish mood. We expect further rate hikes in Switzerland and the Nordics this year. Unsurprisingly, the Danish central bank matched the ECB’s 75bp hike on Thursday, …
9th September 2022
High inflation to prompt another 50bp Norges Bank hike The continued increase in core inflation in August took it further above the Norges Bank’s target. With policymakers in hawkish mood, we expect another 50bp rate hike at the next meeting in two weeks. …
SNB with more work to do In the week when Joel Wicki was crowned “Schwingen King” in the national Swiss wrestling championships, SNB Chairman Thomas Jordan used his speech at Jackson Hole to reiterate his intention to grapple inflation into submission. Of …
2nd September 2022
Swiss inflation at 29-year high At 3.5% in August, up from +3.4% in July, Swiss inflation was a touch higher than expected (CE 3.3%, consensus 3.4%) and reached its highest level since August 1993. (See Chart 1.) In contrast, the core inflation rate was …
1st September 2022
Martin Flodén sets his stall out in advance Martin Flodén struck a hawkish note in a presentation in Stockholm on Wednesday, noting that inflation has been “quite a lot higher” over the summer than the Riksbank had expected and that it is clear the …
26th August 2022
We expect the spread between the yields of 10-year German and Swiss government bonds to widen further over the remainder of this year. The spread between 10-year German and Swiss government bond yields has widened sharply this year , with the former …
25th August 2022
One left-field option for alleviating Europe’s gas crisis that has been doing the rounds is the potential for asking Norway to discount the price of its gas exports. This Update looks at eight key questions on the topic. In short, an agreement would …
24th August 2022
Norway's GDP back to pre-crisis trend Having had a relatively good pandemic, Norway is now one of the few European countries to benefit from the energy crisis. We learnt this week that mainland GDP increased by 0.3% in June. Although this was a little …
19th August 2022
Following today’s decision by the Norges Bank to raise its policy rate by 50bp at the second consecutive meeting, we now expect the Bank to make it a hat-trick of 50bp hikes at the next meeting in September. With price pressures looking strong, further …
18th August 2022
Until recently, Norway appeared well positioned to cope with Europe’s energy crisis and to help other European countries through it too. It has little exposure to Russian supply and, as a net exporter of oil and gas, it has benefited from rising …
12th August 2022
Further rise in core inflation will keep Riksbank in hawkish mode The decline in CPIF inflation in July will be of limited comfort to policymakers given that the core rate, excluding energy, jumped to 6.6%. We still think the Riksbank may raise its repo …
The Norges Bank said in June that it was likely to raise its policy rate by 25bp at its meeting next week, but we now think it is more likely to go for a 50bp hike. Whatever it decides on interest rates, we expect it to signal strongly that further hikes …
11th August 2022
Chances of another 50 bp hike next week rising The increase in CPI-ATE to a record-high will have raised eyebrows at the Norges Bank. We think another 50 basis point hike at next week’s interim meeting is likely. The increase in the headline inflation …
10th August 2022
According to Google it’s “kanariefugl i kulminen” Against the backdrop of heightened tensions between China and Taiwan, and ongoing question marks over whether the US economy is in recession or not, it’s fair to say that the precipitous plunge in the …
5th August 2022
Inflation appears to have peaked Swiss inflation appears to have peaked in July at an enviably low level compared to that of most other advanced economies. That said, the core rate reached its highest level in more than two decades, which is likely to …
3rd August 2022
A tournament to forgot for Nordic football fans Of course, Sweden measures up well against the UK in many ways, including on the economic and political fronts. After all, the estimated 1.4% q/q rise in Swedish GDP in Q2 (data released on Thursday) is in a …
29th July 2022
Q2 GDP to prove a high-water mark until late 2023 The 1.4% q/q increase in Swedish GDP in Q2 poses upside risks to our below-consensus forecast for GDP growth in 2022. But with a recession on the cards in late 2022 and early 2023, activity is unlikely to …
28th July 2022
Danish policymakers won’t be rushed Given that Denmark’s Nationalbank operates an exchange rate peg with the euro, it was no surprise to see it mirror the 50bp rate hike by the ECB on Thursday afternoon. If anything, the only surprise was that it took …
22nd July 2022
The near-term economic outlook has deteriorated in recent months and Switzerland, Sweden, and Denmark are set for mild recessions in late 2022 and early 2023. This is partly a function of external weakness; as highly open economies, the recession in the …
21st July 2022
Monday went from bad to worse in Norway Monday proved a day to forget for Norwegian economists and football fans, with another increase in core inflation in the morning compounded by an 8-nil drubbing by England in the evening. Admittedly, the increase in …
15th July 2022
Stronger-than-expected inflation strengthens case for front loading hikes The stronger-than-expected increase in Swedish inflation in June will only strengthen the resolve of policymakers to squeeze inflation out of the system and raises the chance that …
14th July 2022
Another 50bp hike looking tempting for the Norges Bank The services-driven increase in Norway’s core inflation rate in June increases the chance that the Norges Bank will raise its policy rate by another 50bps at its August policy meeting. The increase in …
11th July 2022
Headwinds to strengthen in H2 The 0.7% m/m increase in Statistics Sweden’s GDP Indicator in May (data released on Wednesday) was stronger than we had expected and means the economy is all but certain to have grown more quickly in Q2 than the 0.6% q/q rise …
8th July 2022
No comfort for the SNB Although Swiss inflation remains enviably low compared to many advanced economies, the further increase in the core rate will only strengthen the SNB’s resolve to squeeze price rises out of the system. A return to positive nominal …
4th July 2022
Riksbank eyeing a sharp but short tightening cycle The Grand Départ of the Tour de France from Copenhagen today is the first time that the race has started in a Nordic country. Fittingly, it comes in a week when the Riksbank shifted up a gear with its …
1st July 2022
As expected, this morning’s 50bp interest rate hike by the Riksbank, to +0.75% saw it join the ranks of the “50bp club”. But while policymakers resisted the urge to join “Club Fed” with a 75bp hike today, they indicated that they will front-load the pace …
30th June 2022
Hello “faster rate rises”, Goodbye “gradual” Chart 1: Use of “Gradual” in Norges Bank’s Monetary Policy Assessment or Equivalent (Number) Sources: Norges Bank, Capital Economics All eyes were on Oslo on Thursday morning as the Norges Bank delivered a …
24th June 2022
Having begun its tightening cycle in April, we expect the Riksbank to join the trend by raising its policy interest rate by 50bps, to 0.75%, next week. We were in a minority of forecasters that correctly predicted that the Riksbank would raise the repo …
23rd June 2022
This morning’s decision by the Norges Bank to raise its key policy rate by 50bps, to 1.25%, was in line with our non-consensus forecast. Also, as we predicted, the Bank all but confirmed that it will break with tradition and raise rates at the “interim” …
The appointment of Erik Thedéen as the new Governor of the Riksbank will only strengthen the relationship between the Bank and the financial regulator, and could result in more macroprudential powers being brought under the oversight of the Bank. It was …
17th June 2022
A shock, albeit with a small “s” It goes without saying that the FX market reaction to yesterday’s surprise 50bp rate hike by the SNB was far more muted than that in the days following the Frankenshock in 2015 (when the franc surged by about one-fifth …
We expect the Norges Bank to step up the pace of tightening at its policy meeting next Thursday (23 rd June) with a 50bp rate hike, to 1.00%, and to indicate that it will probably raise interest rates again at its “interim” meeting in August. Recall that …
16th June 2022
After the excitement of yesterday’s ECB emergency meeting and 75bp hike by the US Fed, the SNB kept its end up by unexpectedly raising its policy rate by 50bps this morning – its first rate rise since 2007. Given its history of unscheduled announcements, …
50 basis point hike in June now looks nailed on The stronger-than-expected increase in Swedish inflation in May lends support to our forecast that the Riksbank will step up the pace of tightening. A 50bp hike in the policy rate now looks increasingly …
14th June 2022
Farewell Stockholm, hello Basel It was announced this week that Cecilia Skingsley will up sticks from Stockholm to Basel in August and leave her role as First Deputy Governor of the Riksbank to head up the BIS’s Innovation Hub. It’s fair to say that Ms …
10th June 2022
Case for a step-up in the pace of rate hikes in June is now overwhelming The stronger-than-expected increase in Norway’s core inflation rate in May lends support to our forecast that the Norges Bank will step up the pace of tightening later this month. A …
