Filtered by Subscriptions: Nordic & Swiss Economics Use setting Nordic & Swiss Economics
The SNB will mirror the ECB by keeping its policy settings unchanged once again at its June meeting (Thursday 16 th ). But with a July rate hike by euro-zone policymakers now locked in, the era of policy stasis in Switzerland is drawing to a close, and an …
9th June 2022
We forecast the SNB to largely shadow ECB rate hikes over the next 18 months or so, albeit allowing the interest rate differential with the euro-zone to widen from 25bps at present to 50bps by end-2022. But the balance of risks is skewed towards the Bank …
7th June 2022
One is not amused by King Harald V’s luck With the UK gripped by Jubilee fever, it is worth pointing out that Sweden, Norway, and Denmark are also constitutional monarchies whose current rulers have been on the throne for decades. It is hard to compare …
1st June 2022
Solid Q1 but activity will have softened in Q2 The stronger-than-expected increase in Swiss GDP in Q1 provides a solid base for year-on-year growth rates throughout 2022. But with surveys heading south, and signs of stagnation in the euro-zone in Q2, we …
31st May 2022
Nordics to follow ECB (following the Fed) The change to our ECB forecast this week (see here ) has big implications for Scandinavian central banks so we are now formally changing our projections for the Riksbank, Norges Bank and Nationalbank. (See Key …
27th May 2022
50bp is the new 25bp? It was a quiet week on the data front, but we had plenty of comments and speeches from policymakers to pick through – notably from three of the members of the Riksbank’s Executive Board. Deputy Governors Henry Ohlsson and Martin …
20th May 2022
Just as policymakers at the ECB are becoming more concerned about inflation expectations (see here ), the rise in expectations in Sweden is giving the Riksbank plenty to fret about too. The Bank’s preferred measure – gleaned from a survey of money market …
13th May 2022
Finland, NATO, and Russian gas supplies The fact that Russia is reportedly close to cutting off the supply of natural gas to Finland in retaliation for its intention to join NATO poses a risk for Finnish industrial firms that are most reliant on gas – …
Inflation at a 31-year high The stronger-than-expected increase in Swedish inflation in April was partly due to high energy and food prices but also because of broadening price pressures. We expect the core rate to remain above the Riksbank’s target for …
12th May 2022
Inflation pick-up brings 50bp hike in June on the table The stronger-than-expected increase in core inflation in April raises the chances that the Norges Bank will step up the pace of tightening at its next rate decision, in June. The increase in CPI …
10th May 2022
Schlegel won’t rock the boat at the SNB The SNB announced this week that Martin Schlegel will succeed Fritz Zurbrügg as Vice-Chair of the Governing Board after Mr Zurbrügg retires at the end of July. Mr Schlegel is part of the furniture at the SNB, having …
6th May 2022
As was widely expected, the Norges Bank left interest rates on hold at +0.75% today and all but confirmed that “the policy rate will […] be raised in June”. After June, we forecast two more rate hikes in 2022 and one per quarter next year, which would …
5th May 2022
Stefan Ingves would struggle to keep a secret Much of the analysis following the start of repo rate hikes by the Riksbank yesterday has pushed a narrative that the Bank’s messaging was more hawkish than expected and its decision to raise rates as a …
29th April 2022
We think that the Norges Bank will keep interest rates on hold, at +0.75%, next Thursday, before resuming its tightening cycle in June. We forecast one rate hike per quarter this year and next, which would leave rates at 2.50% by end-2023. But the balance …
28th April 2022
As we had expected, the Riksbank finally bowed to economic logic in its April meeting by raising the repo rate, to +0.25%, and announcing that it will begin to shrink its balance sheet this year. While the Bank has spoken in the past of the need to tread …
The higher prevalence of renewables in the energy mixes than in most of Europe means the squeeze on incomes from higher gas prices will be less acute in Switzerland and the Nordics, and Norway even stands to benefit from elevated commodity prices. But as …
27th April 2022
Boom time for Salmon prices In an otherwise extremely quiet week for tier-1 macroeconomic data releases, the publication of weekly salmon price data from Statistics Norway stood out. In short, it’s boom time for the fishing industry. The export price of …
22nd April 2022
Having so far been a bastion of dovishness amongst G10 central banks, we think that the stage is set for the Riksbank to start to raise the repo rate next Thursday, and it will press on with further rate rises thereafter. But with “QT” likely to do some …
21st April 2022
Price pressures building This week brought March inflation releases from Norway, Denmark and Sweden. Norway’s inflation data were a little weaker than expected, with the headline rate at 4.5% and the core rate unchanged at 2.1%. (See here .) Those …
14th April 2022
Inflation at a 31-year high The stronger-than-expected increase in Swedish inflation in March is likely to give more ammunition to the hawks in the Riksbank, and lends support to our view that the Bank will start to raise the repo rate and press ahead …
Lower-than-expected inflation won’t stop Norges Bank hiking Although headline and core inflation came in below expectations in March, underlying price pressures are likely to push both measures up a bit in the coming months. Meanwhile, the Norges Bank is …
11th April 2022
Flodén dials up the hawkishness While Anna Breman recently vented her hawkish views at a bunch of students (see here ), Martin Flodén treated a roomful of finance types to a rousing monetary call to arms this week. (See here .) (Recall that Mr Flodén and …
8th April 2022
Shifting goalposts for Nationalbank and SNB The fact that we now expect the ECB to hike interest rates sooner and faster than we previously anticipated naturally affects our outlooks for policy in Switzerland and the Nordics. Note that we now forecast the …
1st April 2022
Swiss inflation to remain above 2% for much of this year Swiss inflation rose further above the SNB’s definition of price stability in March, and higher commodity prices and continued supply problems will keep it there for most of this year. Given the …
Breman vents to a bunch of 16-19 year olds Riksbank Deputy Governor Anna Breman appeared to take out her hawkish frustrations on a group of secondary students in a speech on Wednesday. One can only speculate as to what the pupils made of the talk; while …
25th March 2022
Ida Wolden Bache kicked off her time in charge at the Norges Bank with a rate hike and prepared the ground for even more aggressive tightening. We now expect 175bps of hikes by end-2023, to 2.50%, and there is good chance that the Bank front-loads the …
24th March 2022
What’s Swedish for “fundamental change of view”? In a week when the US Fed and the Bank of England both raised interest rates, Riksbank Governor Ingves finally appears to have woken up to the need for tighter policy in Sweden. Mr Ingves reportedly said …
18th March 2022
The Norges Bank will kick off the post-Olsen era next Thursday with a 25bp interest rate hike, to +0.75%, and while we expect it to raise rates three more times this year, the balance of risks is skewed towards it proceeding even faster. Meanwhile, …
17th March 2022
Another blow to the notion of Swedish inflation exceptionalism The stronger-than-expected increase in Swedish inflation in February is surely the final nail in the coffin for the Riksbank’s thus-far dovish stance, and lends support to our view that the …
14th March 2022
Franc(ie) goes to Hollywood parity The Swiss franc rose through parity with the euro in the early hours of Monday for the first time on record. However, its foray into uncharted territory was brief, and it has since given up the gains it made in March. It …
11th March 2022
Finland most exposed to Russian sanctions We have yet to revise down our GDP growth forecasts for Switzerland and the Nordics in response to the sanctions on Russia, but the negative impact of the conflict will be smaller than for the euro-zone. (Note …
4th March 2022
While supply-chain links between the EU and Russia and Ukraine are small, shortages of seemingly obscure inputs can cause significant disruption, and add to price pressures, if alternatives cannot be sourced quickly. Aside from the most energy-intensive …
3rd March 2022
The EU would have a number of options to help compensate if Russian gas supplies were to be turned off, but in practice we suspect that some degree of power rationing would be needed. Past episodes of energy rationing were not as damaging as one might …
1st March 2022
Back in safe-haven mode Just weeks after hawkish messaging from the ECB helped to weaken the Swiss franc against the euro (see here ), the Russia-Ukraine conflict has put the currency back into full-on safe-haven mode. Perhaps unsurprisingly, the exchange …
25th February 2022
Yields on 10-year Swiss government bonds have moved in lockstep with those of Bunds since the start of the pandemic, and thus followed their German counterparts above zero in January. (See Chart 1.) While the Swiss yield has dropped back a bit since …
21st February 2022
Yet another blow to Riksbank’s dovish stance Statistics Sweden made a bid for the most eyebrow-raising data release of the week with the news this morning that core inflation jumped from 1.7% in December to 2.5% in January. (See here .) We, the consensus …
18th February 2022
Hand of the hawkish triumvirate strengthened The increase in Swedish CPIF excluding energy was significantly higher than expected and pushed the core rate above the Riksbank’s 2.0% target for the first time in nearly three years. While we expect headline …
We think that the gap between the yields of 10-year German and Swiss government bonds will re-emerge over the next couple of years as the ECB tightens policy more quickly than the SNB. Prior to the pandemic, there was a spread between the yield of the …
17th February 2022
Governor Ingves is not for turning We were surely not the only ones to have thought, “What is the Riksbank playing at?”, following the damp squib of its policy announcement on Thursday morning. Recall that the Bank barely changed its dovish messaging, and …
11th February 2022
Swiss inflation at a 13-year high but will head down from here Inflation was stronger than expected in Switzerland in January, although the upward surprise was not in the same league as that seen in the euro-zone and Swiss inflation is still consistent …
While the Riksbank largely stuck to its dovish stance this morning, the fact that three of the six members of the Executive Board entered reservations and favoured reducing the size of the balance sheet this year leaves the direction of policy on a knife …
10th February 2022
Fall in CPI-ATE unlikely to deter the Norges Bank Given the backdrop of a tightening labour market, the fall in CPI-ATE is likely to be a one-off. We think that once the latest wave dissipates, the core inflation rate will pick up again and may rise above …
“Mr Establishment” gets the job Today’s appointment of Jens Stoltenberg as Governor of the Norges Bank shows that worries of potential political nepotism ultimately fell on deaf ears, and completes the trifecta for top jobs for the ex-PM and Finance …
4th February 2022
Today’s appointment of Jens Stoltenberg as the new Governor of the Norges Bank is a slap in the face for the bus driver, plumber, and baker who had applied for the job, as well as the two thirds of Norwegians that favoured Ida Wolden Bache to succeed …
While the Riksbank is likely to leave the repo rate unchanged at zero next Thursday (10 th February), a hawkish shift is now long overdue. We have pencilled in a 25bp repo rate hike in November 2022, which is ahead of the economic consensus, but there is …
3rd February 2022
Strong industrial activity to offset services softness The continued resilience of the manufacturing PMIs in Switzerland and Sweden in January indicates that industry will have supported activity through a restrictions-driven soft patch for services in …
1st February 2022
Stage set for Riksbank mea culpa in February The 0.3% m/m increase in Sweden’s GDP Indicator in December, released this morning, left it a whopping 4.7% higher than its February 2020 level. (See Chart 1.) We will have to wait until the 28 th February for …
28th January 2022
The re-tightening of restrictions has overshadowed the start of the year in Switzerland and the Nordics, and our GDP growth forecasts for 2022 are about 0.5%-pts lower than the consensus. Nonetheless, the soft patches for activity should be short …
26th January 2022
Denmark achieves a geranium “greenium” Denmark joined the growing list of countries to offer a green sovereign bond, on Wednesday. The country is far from a trailblazer in the area, with the Netherlands, Germany, and the UK all amongst those to have …
21st January 2022
After twelve years in the job, Øystein Olsen was never going to spring a surprise at his last meeting in charge of the Norges Bank. Instead, the Bank left its policy rate unchanged at 0.5% and reiterated that it “will most likely be raised in March”. We …
20th January 2022
