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Nordic & Swiss

Nordic & Swiss Economics Update

Nordic & Swiss Economics Update

50 is the new 25 for the Norges Bank

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 rate increases are likely to follow.

18 August 2022

Nordic & Swiss Economics Update

Riksbank to front-load rate hikes and accelerate “QT”

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 of tightening over the next 6-9 months and accelerate their efforts to shrink the balance sheet.

30 June 2022

Nordic & Swiss Economics Update

Norges Bank joins the “50bp club”

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” meeting in August, to 1.50%.

23 June 2022
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Nordic & Swiss Economics Update

Erik Thedéen a safe pair of hands to succeed Ingves

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.

Nordic & Swiss Economics Update

SNB steals a march on the ECB

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, we think it more likely than not that the Bank will raise rates again, to zero or even into positive territory, before the next scheduled meeting, in September.

Nordic & Swiss Economics Update

Looming ECB rate hikes give SNB plenty to ponder

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 letting the rate gap widen by more, embracing a weaker franc, and perhaps taking the opportunity to start to shrink its out-sized balance sheet.

Nordic & Swiss Economics Update

Norges Bank to resume its tightening cycle in June

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 leave rates at 2.50% by end-2023. However, the balance of risks is still skewed towards the Bank front-loading its efforts.

Nordic & Swiss Economics Update

Riksbank completes “Operation Reverse Ferret”

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 carefully with its tightening cycle, in practice we expect policymakers to tighten faster than they currently project next year.

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