Well placed to navigate choppy waters

As highly-open economies, Switzerland and the Nordics are far from immune to the issues of slowing global growth and supply-chain shortages that are currently vexing investors. Sweden is perhaps most exposed; the impressive rebound there looks to have peaked in July and momentum will fade in H2 2021.
David Oxley Senior Europe Economist
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Nordic & Swiss Economics Weekly

SNB’s patience appears to be wearing thin

We argued this week that the upside for the Swiss franc was limited and its inability to push past the CHF 1.04 per euro mark suggests that policymakers’ patience may already have been exhausted. We await the publication of the weekly sight deposit by the SNB on Monday to confirm our suspicions that the Bank has seen enough. But if the SNB is to avoid adding substantially to its already-bloated balance sheet, it will be hoping – like the rest of us – that Omicron fears blow over soon. Next week, we expect data to show that mainland GDP in Norway rose by about 0.2% m/m in October and that core inflation remained well below target in November.

3 December 2021

Nordic & Swiss Economics Update

Pandemic-era lessons for the Swiss franc

Given the uncertainty around Omicron, and the revealed preference of the SNB in recent weeks to largely stay out of the FX market, we would not be surprised to see the Swiss franc rise further against the euro in the near term. But any upside is limited, and the balance of risks is tilted towards depreciation in 2022. In view of the wider interest, we are also sending this Nordic and Swiss Economics Update to clients of our FX Market Service.

1 December 2021

Nordic & Swiss Data Response

Switzerland CPI & Manufacturing PMIs (Nov.)

Inflation surprised on the upside in Switzerland in November, but this was due to temporary factors and it is likely to fall back to below 1.0% over the coming months. The upshot is that there is next to no chance of the SNB tightening policy anytime soon, and the big question mark is when it might intervene.

1 December 2021

More from David Oxley

Nordic & Swiss Chart Book

Monetary policy divergences

The Norges Bank’s tightening cycle began at the end of last month and we suspect that investors are underestimating the pace of rate hikes to come. By contrast, the Riskbank looks set to leave interest rates unchanged for some time, instead adjusting its monetary stance by shrinking its balance sheet. And interest rates at the SNB remain closely tied to those at the ECB, which means they are going nowhere fast.

15 October 2021

Nordic & Swiss Data Response

Sweden Consumer Prices (Sep.)

While CPIF inflation in Sweden rose to a 155-month (!) high in September, we expect core inflation to remain at a more moderate level over the coming years, and lower than in the US, say. As a result, we forecast the Riksbank to leave the repo rate on hold at zero throughout our forecast horizon.

14 October 2021

Nordic & Swiss Data Response

Norway Consumer Prices (Sep.)

There was nothing in today’s release of Norwegian inflation data for September to overly trouble the Norges Bank, or cause it to deviate from its stated intention to raise interest rates again in December.

11 October 2021
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