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Deciphering the SNB’s intentions on the FX front The weekly sight deposit data published by the SNB every Monday morning provide a timely, if imprecise, window into the Bank’s actions in the FX market. The last three data releases suggest that the SNB has …
12th November 2021
Price pressures still weaker than in the US Inflation releases on both sides of the Atlantic this week highlighted how price pressures are still weaker in the euro-zone than in the US. Core inflation in Germany rose in October to 2.8% (see here ), much …
After failing to push back convincingly against financial markets’ expectations for rate hikes in last week’s press conference, ECB policymakers were out in force this week insisting that the Bank will not raise rates next year. Christine Lagarde said the …
5th November 2021
Familiar foe of flying franc occupying minds at SNB Unlike the Norges Bank , the SNB did not have a policy meeting to keep itself busy this week. That said, while the meeting in Oslo was a snooze-fest, as anticipated, the recent surge in the value of the …
The ECB stuck to its script this week, with Christine Lagarde claiming that, after some “soul searching”, the Bank was comfortable with its view that the recent surge in inflation will prove to be transitory. Also, she didn’t sound too worried that other …
29th October 2021
Strong rebound in Sweden Data released this week showed that Sweden’s economy grew by a stronger-than-expected 1.8% q/q in Q3, but the data weren’t as encouraging as they first appeared. The upside surprise in the third quarter was largely due to a …
The timing of Jens Weidmann’s resignation was not the shock that many journalists suggested it was. After all, early resignations have become as much of a tradition for the Bundesbank as its opposition to QE and negative interest rates! Nor was it a …
22nd October 2021
Riksbank Board increasingly finely balanced Like any good double act, Riksbank Governor Ingves and Deputy Governor Flodén stuck to the same script when they jointly addressed the Bank’s Finance Committee on Tuesday. Both reiterated the view that the …
Core inflation still subdued While global financial markets are obsessing over the possible rebirth of inflation, there are precious few signs that it is about to take off in Scandinavia. We learnt this week that the headline rate rose in both Norway and …
15th October 2021
Higher oil and gas prices… lower inflation? The rollercoaster ride in European gas prices continued this week, but the big picture is that they remain very high. Meanwhile, oil prices have continued to climb. We think that this will contribute to a bigger …
Moves in wholesale natural gas and electricity prices have continued to dominate this week in the euro-zone, with the price of European natural gas having doubled over the past month and currently trading almost 12% higher than it was just a week ago. …
8th October 2021
Halloween came early this year in Sweden It might not be Halloween until the end of the month but the 3.8% m/m drop in Sweden’s GDP Indicator in August (released on Wednesday) was a horror show in its own right. (See here .) (Incidentally, the fact that …
The 3.4% euro-zone inflation rate recorded in September (up from 3.0% in August) is probably not the peak. (See here .) Surging European gas prices, which have risen by more than twenty-fold from last year’s lows, prompted us to revise up our forecasts …
1st October 2021
United façade at the Riksbank set to be tested Against the backdrop of the recent hawkish shifts by the US Fed and the Bank of England – and the start of hikes in Norway – the release of the minutes from the Riksbank’s last policy meeting underline that …
This week, some of the world’s major central banks, from the US Fed to the Bank of England , hinted that they will be shifting towards tighter monetary policy in the months ahead. Indeed, the Norges Bank this week hiked its policy rate, the first G10 …
24th September 2021
The phoney interest rate ‘war’ in Norway is over Norwegian policymakers would make terrible poker players because they have a habit of telling you what they will do and do not bluff. Accordingly, having finally started the long-awaited and well-signalled …
Rising inflation eating into spending power Data published this week highlight the twin drags of weak pay growth and rising inflation to households’ real incomes. We expect inflation to fall sharply next year, but the risks to our forecast are to the …
17th September 2021
Policymakers at a three-pronged fork in the road Next week’s three central bank announcements from Sweden, Switzerland, and Norway (in that order) promise to offer something for everyone, whatever their predilection on the policy front. The Riksbank will …
Norway is a riddle, in a mystery, inside an enigma Norwegians will go the polls in parliamentary elections on Monday in what has been dubbed the “climate election”. The run-up to the vote has been dominated by a debate over the appropriate speed at which …
10th September 2021
The future of ECB QE On Thursday, the ECB announced a slight reduction in the pace of its PEPP purchases but delayed more important decisions to December. (See here .) So October’s meeting looks set to be dull, and Christine Lagarde might need to channel …
The 3.0% inflation rate recorded in the euro-zone in August is the highest for a decade but it will not be the peak for this year. We expect the headline rate to reach over 3.5% in the coming months. And in Germany, the national CPI inflation rate could …
3rd September 2021
Mamma Mia! ABBA are back! Of course, it could just be a coincidence that ABBA announced that they are re-forming the day after we released a Focus with a shameless ABBA pun in the title, but we’d like to think otherwise. We will resist the temptation to …
Do you want the good news or the bad news? Business surveys took centre stage on Wednesday morning, with strong parallels between the August readings of the Swiss Investor Sentiment Index and the German Ifo . Encouragingly, businesses in both countries …
27th August 2021
This week saw the release of the first euro-zone business surveys for August, which provided reassurance that the region’s economy continued to grow strongly this month despite concerns about the Delta variant. Although the euro-zone Composite PMI and the …
Norges Bank gets its nose in front The Norges Bank’s “interim” August policy announcement on Thursday did not upset the form book, and the Bank left interest rates on hold at a record low of zero once again. (See here .) The Bank said that economic …
20th August 2021
Activity continuing to increase The latest national accounts data confirmed this week that GDP grew by 2% q/q in the second quarter (see here ), but that’s old news now. Timelier data suggest that the economy has continued to grow, with only limited …
With six weeks left until Germany’s federal elections, on 26 th September, opinion polls suggest that things have got more complicated. In brief, and with apologies for the alphabet soup, they show that support for the CDU/CSU has declined compared to …
13th August 2021
All eyes on the north Atlantic The world tends to only take notice of Iceland after spectacular events, be it the implosion of its banking sector or the explosion of a volcano . The country has been thrust into the spotlight once again recently following …
It was a week of more generally good news for the euro-zone economy. The risk that the Delta variant would halt the recovery in its tracks is receding rapidly. Daily infection numbers are now falling consistently in Spain and the Netherlands, which were …
6th August 2021
A macroeconomist’s take on the Olympics Rather than just enjoying the spectacle of Norway’s Karsten Warholm storming to victory in the 400m hurdles this week, we found ourselves frustrated by the emphasis that sports reporters put on nominal rather than …
Data published today revealed that the euro-zone economy grew more rapidly than anticipated in Q2, with GDP rising 2.0% q/q whereas the consensus and our forecast were both for 1.5%. As we pointed out earlier , the upside surprise was due to very strong …
30th July 2021
Global factors driving Swiss industry and the franc We would not overplay the importance of the second consecutive fall in the Swiss KOF Economic Barometer (July data were released this morning). After all, the indicator is still well above its long-run …
The ECB followed up on its new strategy this week by raising the bar for future interest rate hikes. (See here .) The key change is that the Governing Council now says it will leave policy rates at current rates or lower until it sees inflation reaching …
23rd July 2021
Next year’s games will be better for Team N&S While the Swedish women’s football team humbled the USA in the first game of their Olympic campaign this week, Switzerland and the Nordic countries don’t tend to excel in the summer games. Indeed, as shown in …
Earlier today we published our European Economic Outlook , in which we revised up our euro-zone GDP growth estimates this year and next, to an above-consensus 5.0% and 4.5% respectively. The rebound will be faster in the core countries than in the …
16th July 2021
You guessed it: no change at the SNB The Swiss National Bank is nothing if not consistent. It has left interest rates unchanged since 2015 and is not shy about using the “copy and paste” function in its press releases. So it seems only natural that …
Loose for (slightly) longer The ECB’s new symmetric 2% inflation target, with some tolerance for overshooting, is not as radical as it could have been, and does not grant the Bank as much flexibility as the Fed. But it is an important change that means …
9th July 2021
SNB policy tied to the ECB’s The adoption of a 2% inflation target by the ECB this week, and the announcement that the Bank will allow inflation to overshoot if needed, will not have been a he surprise to policymakers in Switzerland and the Nordics. …
This week has seen another set of stellar business surveys, underlining that the recovery is still going strong. The final headline euro-zone Manufacturing PMI for June was revised up from the flash estimate to a new record high. And the EC’s economic …
2nd July 2021
“Stockholm Street” or “Stockholm-enders”? This week saw the latest instalment of the political soap opera in Sweden. Having lost a “no confidence” vote on the 21 st June (see here ), the resignation of Prime Minister Stefan Löfven on Monday means the …
Global developments driving the Nordic majors After last week’s seemingly counterintuitive drop in the NOK following the hawkish message from the Norges Bank (see here ), it was the turn of the Swedish Krona to apparently defy the laws of the market: the …
25th June 2021
Another week, another set of euro-zone survey data highlighting the strength of the region’s economic bounce back as virus restrictions are lifted on the services sector. The flash Composite PMI for the euro-zone rose to its highest level in 15 years and, …
Football enthusiasts will not need to be told that life is still not back to normal in Europe. Only 13,000 fans watched Germany lose to France in the 75,000-capacity Allianz Arena, for example. Health restrictions also limit the number of people allowed …
18th June 2021
Norges Bank trumped by the US Fed The Norges Bank laid its cards on the table this Thursday, all but confirming that it will start to raise its key interest rate from September. (See here .) In the event, it was overshadowed by the less anticipated news …
Data published by Eurostat this week revealed that the euro-zone economy had a less bad start to the year than previously thought. The third estimate of Q1 GDP showed that the contraction in the first quarter was half as big as previously reported, with …
11th June 2021
Falling vegetable prices In a week when we learnt that core inflation in the US reached a 28-year high of 3.8% in May it is difficult to know what to make of the detailed discussion of vegetable prices in Statistics Sweden’s CPI press release . The good …
Inflation likely to surprise on the upside this year May’s inflation data were a little stronger than we or the consensus had expected (see here ), and inflation looks set to keep rising in the second half of the year. There is a laundry list of factors …
4th June 2021
New Riksbank Act proving to be Ingves’ kryptonite If somebody was to devise a superhero franchise featuring Riksbank Governor Stefan Ingves, they could do a lot worse than casting the proposed new Riksbank Act as his arch-enemy. Like a legislative version …
After rising steadily since the end of March, sovereign bond yields have dropped back quite sharply over the past week or so. For example, the Italian 10-year yield fell from 1.16% on 19 th May to 0.93% at the time of writing, and the Italy-Germany spread …
28th May 2021
Swiss government calls time on EU talks It has been an eventful week in the news in Switzerland, with a placing in the Eurovision Song Contest for the first time in 33 years, a fighter jet crash (pilot uninjured, plane less so), and the announcement that, …