Erik Thedéen makes a splash

The new Riskbank Governor has opened his account with a hawkish policy shift and we now think the Bank’s policy rate will peak at 3.5% this year, rather than 3.0%. Nonetheless, we still think Sweden will be earlier than most in beginning to loosen policy because the economy is heading for a deep recession. Next week we expect to learn than headline inflation jumped in Switzerland, though core inflation remained low, and that Norway’s GDP expanded rapidly in Q4 last year.