The ECB’s recent decision to leave interest rates on hold, and its associated communications, confirm that its tightening cycle is now almost certainly over. But despite inflation having fallen sharply, we believe the strength of the labour market, including persistent wage growth, will keep the Bank from cutting rates until the second half of next year – even if the economy tips into recession in the meantime. Elsewhere, tighter monetary policy is weighing heavily on the Swedish economy, which we think will prompt the Riksbank to start cutting interest rates sooner than the ECB. And the low level of inflation in Switzerland suggests the SNB will also turn to interest rate cuts in the first half of 2024. The Norges Bank is likely to keep rates at their peak until the middle of next year.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services