Risks still lie to the downside

As oil prices have fallen over the past few months, investors’ expectations for interest rates in Norway have fallen roughly into line with our own. Rate expectations in Switzerland have edged down too, reflecting the weakness of the latest economic data. But in both countries, the risks still lie to the downside. The euro-zone economy looks set to grow at a more moderate pace in 2019, and we expect growth in the US to slow sharply. What’s more, while we assume that the UK will leave the EU with a deal, there is a significant chance that Brexit will be much more chaotic. All of this could yet stop the Norges Bank from raising interest rates at all next year, and prompt the SNB to leave interest rates unchanged until 2021.