Central banks to tighten very slowly

We expect GDP growth in Switzerland and across the Nordics to slow this year and next. As a result, price pressures should generally remain subdued and central banks look set to raise interest rates very gradually. We think that the Norges Bank and Riksbank will raise interest rates once this year, while the SNB looks set to leave policy unchanged for a long time to come. Our pessimistic view on Norway’s economy, and our forecasts that oil prices will fall, suggest that the krone will weaken this year. By contrast, we forecast the Swedish krona to appreciate. And we think that rising safe haven demand as the global economy slows and political risks mount in Europe will cause the Swiss franc to strengthen.