Nordic & Swiss


SNB to take ECB’s lead; Stoltenberg for NB?

Having drawn flak from domestic banks for keeping interest rates well below zero since 2015, the SNB would surely take the chance to raise its policy rate at the earliest possibility after the ECB (which we now expect to hike in 2024, if not sooner). But the bigger picture is that interest rates will be raised gradually at best, and the policy rate in Switzerland is still on track for a sub-zero decade.

17 December 2021

Norges Bank to stay ahead of the Fed as SNB holds pat

While the Swiss National Bank maintained the status quo once again this morning (yawn), the Norges Bank continued its tightening cycle, as expected, and opened the door to another rate hike in March. We are sticking to our hawkish forecast that rates will reach their pre-virus level of 1.50% by end-2022. Note: Central Bank Drop-In – The Fed, ECB and BoE are just some of the key central bank decisions expected in this packed week of meetings. Neil Shearing and a special panel of our chief economists will sift through the outcomes on Thursday, 16th December at 11:00 ET/16:00 GMT and discuss the monetary policy outlook for 2022.

16 December 2021

How to get a job at the SNB; declining mobility

Our CE Mobility Trackers for Sweden and Norway paint a downbeat picture for the consumer sector and mirror the clear downward trend seen in the euro-zone over H2 2021. So while we still expect the Norges Bank to continue its tightening cycle on “Super Thursday” next week, policymakers have lots of cover to forego a rate hike for now if they felt so inclined. Elsewhere, the SNB is all but certain to leave its policy settings unchanged yet again next week, and our forecast that headline CPIF in Sweden will have been unchanged at 3.1% in November is below the consensus.

10 December 2021
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Norges Bank to hike as planned, despite Omicron

Omicron means that a Norges Bank rate hike next Thursday is no longer as nailed on a prospect as it once was, but we still think that policymakers will decide to raise rates to +0.50%. Meanwhile, although the SNB has let the franc rise in recent weeks, it will reiterate its willingness to intervene “as necessary”.

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.

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.

Virus news testing the SNB; “Take 2” for Swedish PM

Market worries about the B.1.1.529 virus variant have exacerbated upward pressure on the safe-haven Swiss franc and will test the SNB’s tolerance of a stronger currency. In our view, the Bank seems to be focused on managing rather than preventing the appreciation against the euro and we suspect that it will eschew large-scale interventions unless the franc reaches the CHF 1.025 per euro mark. Next week, we expect Swedish national accounts data to show that GDP rose by 1.8% q/q in Q3, while Swiss inflation data are likely to show that the headline rate edged down to 1.1% in November.

26 November 2021

Scandinavia & Switzerland: Values to rise further

The rebound in economic activity and robust investor demand paved the way for a continued improvement in Scandinavian and Swiss property markets in Q3. Office and industrial values rose further, as strong competition pushed down yields. Retail yields also fell in Stockholm. But we think its too soon to call a turning point for retail. Indeed, retail rents also fell, indicating that conditions in the sector are still weak. Nevertheless, the better outlook for the other sectors means we think that all-property values will rise further. That said, with economic growth expected to slow in the coming months and structural shifts weighing on retail and office sectors, the pace of improvement is likely to moderate.

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