No inflation scare in Scandinavia or Switzerland…

If there is a global inflation scare, the Scandinavians are yet to get the memo. In a week when we learnt that core inflation hit a 28-year high in the US in May, we also learnt that the core inflation rate fell to very low levels in both Norway and Sweden. Nonetheless, with the Norges Bank is likely to be the first major advanced-economy central bank to raise interest rates we will be hosting a twenty-minute “drop in” on the outlook for Norway after next Thursday’s Norges Bank meeting – you can register for it here.
Andrew Kenningham Chief Europe Economist
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Nordic & Swiss Economics Weekly

Green bond germination in Denmark

The fact that Denmark’s first “green” bond was nearly five-fold oversubscribed this week, and achieved a 5bp “greenium” over the corresponding conventional 10-year bond, illustrates the depth of investor demand for green debt. Next week, the main data release of note is the preliminary release of Sweden’s Q4 GDP, which we expect will show that output rose by 1.1% q/q.

21 January 2022

Nordic & Swiss Economics Update

Norges Bank will resume hikes in March

After twelve years in the job, Øystein Olsen was never going to spring a surprise at his last meeting in charge of the Norges Bank. Instead, the Bank left its policy rate unchanged at 0.5% and reiterated that it “will most likely be raised in March”. We think it will raise rates four times this year, to 1.5%.

20 January 2022

Nordic & Swiss Chart Book

Riksbank to have to change tack

The Riksbank has learnt from its past tendency to project rate hikes that never arrive. But the single repo rate rise by end-2024 that it currently projects is stretching the limits of plausibility in the other direction.

17 January 2022

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European Economics Update

ECB’s new target marks death of Bundesbank tradition

If confirmed, the ECB’s decision to adopt a 2% inflation target and allow room to overshoot it if needed would mark a historic shift towards the mainstream for the ECB. It would have no immediate implications for monetary policy, but in the longer run may imply policy would be looser for longer.

8 July 2021

European Chart Book

Activity taking off as hospitality reopens

The economy has continued to rebound strongly as governments have lifted almost all restrictions on retail and restaurants and eased rules on foreign travel. Restaurant bookings are back above pre-pandemic levels and the number of flights is rising steeply (no pun intended!). This rebound is likely to put a bit more pressure on inflation, which looks set to resume its upward course in the second half of the year after pausing in June. The latest statements from key policymakers suggest that the ECB is in no hurry to scale back its asset purchases, but we think the Governing Council will begin to taper its bond-buying in the coming months.

7 July 2021

European Data Response

German Industrial Production (May)

The small decline in German industrial production in May, which left it well below its pre-pandemic level, was due to another big fall in vehicle production. The problems in that, admittedly important, sector are likely to be resolved only gradually, but otherwise the German economy is recovering strongly.

7 July 2021
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