Case for 2018 hikes in Sweden and Iceland building

There are still no signs that domestic political uncertainty is weighing on the Swedish economy, so we continue to expect the Riksbank to raise rates in December. Meanwhile, rising inflation expectations mean that Iceland’s central bank is likely to signal next week that it too will raise rates before the end of the year. And fiscal developments in Italy this week have kept the Swiss franc under upward pressure, which we expect to continue.