Tightening cycle not yet over

The outlook for economic activity in the Nordics and Switzerland remains poor. GDP is already contracting sharply in Sweden and we think Norway and Switzerland will only narrowly avoid recessions. However, this will not be enough to bring inflation down to central bank targets without further policy tightening. We expect policy rates to peak at 3.5% in Norway, 2.25% in Switzerland and 4.0% in Sweden. That said, we think rates will then come down rapidly in 2024 and 2025 as inflation drops back towards the target.