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The Riksbank stuck firmly to “Plan A” this morning by maintaining the status quo for the repo rate and its asset purchase programme. However, the slight tweak to the Bank’s language on the outlook for the balance sheet lends support to our view that …
21st September 2021
The low use of gas, and a reliance on nuclear and renewables for electricity generation, means that Switzerland and the Nordics are less exposed to the recent surge in gas prices than other parts of Europe – particularly Spain. While Switzerland and the …
20th September 2021
The fact that the Swedish GDP indicator was nearly 2% above its pre-virus level in July puts a question mark over the wisdom of the Riksbank’s plan to exhaust its asset purchase envelope by end-2021. We think there is a rising chance that policymakers …
8th September 2021
This morning’s decision by the Norges Bank to leave its policy rate on hold at a record low of zero was no surprise. Following the delay to the tightening cycle in New Zealand, the Norges Bank is back in pole position to be the first G10 central bank to …
19th August 2021
The success of reduced working hour trials in Iceland was largely founded on adopting better working practices which, if embraced elsewhere, might offer no-cost ways of achieving better work-life balances. However, given that Iceland’s trials were centred …
30th July 2021
We think that the Norwegian krone will continue to strengthen against the euro over next year or so. This is despite our forecast for a pull-back in oil prices and reflects our view of the relative prospects for monetary policy in Norway and the …
1st July 2021
The Riksbank was always likely to maintain the status quo this morning, but against the backdrop of recent hawkish shifts by other central banks, notably the Fed, the focus was on how its thinking had shifted. The short answer is: not a lot. You did not …
The passing of this morning’s “no confidence” vote in Swedish Prime Minister Stefan Löfven has plunged Sweden back into a period of political purgatory. While the political outlook is unclear, the near-term macroeconomic implications are likely to be …
21st June 2021
While the Norges Bank left its policy rate on hold at a record low of zero once again this morning, it all but confirmed that it will raise rates in September – which would be well ahead of the RBNZ and the Fed, for example. We expect the NOK to gain …
17th June 2021
While the Norges Bank will start hiking in Q3, and we now expect the Fed to raise rates twice in 2023, developments in Frankfurt will continue to set the tone at the Swiss National Bank. Having left the policy rate on hold at -0.75% again this morning, …
The Delta variant does not appear to have taken hold in mainland Europe as yet, but the experience of the Alpha variety suggests that it could be dominant by the end of July. While this would be far from helpful, it should not prevent the euro-zone …
16th June 2021
A rate hike by the Norges Bank in September would make it the first G10 central bank to start to raise interest rates after the pandemic, by a comfortable margin. As a result, the NOK is likely to gain ground on the euro and the SEK by the end of the …
15th June 2021
While the breakdown in Treaty talks between Switzerland and the EU makes the outlook for Swiss exporters more uncertain, we doubt that the lasting economic impact will be very big. Yesterday’s news that the Swiss government has walked away from talks with …
27th May 2021
The Norges Bank has a history of beginning to tighten policy earlier than the ECB and we think it will follow that pattern again this year. Meanwhile, although it’s not the most likely scenario, we think that financial markets are under-estimating the …
While the vaccine rollout in Europe has finally kicked into gear, the legacy of the slow start means the EU is more exposed than the UK or the US if the Indian variant spreads quickly amongst the unvaccinated. The vaccine rollout on the continent has gone …
18th May 2021
As expected, the Norges Bank left its policy rate on hold at a record low of zero once again this morning but remains on track to be the first advanced central bank to start to raise interest rates, later this year. Given that the Bank tends not to be …
6th May 2021
The decision by the Riksbank to leave the repo rate and its other policy settings unchanged today will have come as a surprise to no one. While policymakers are increasingly optimistic about the near-term outlook for the economy, they are clearly in no …
27th April 2021
The fact that the US Treasury refrained from calling Switzerland a currency manipulator in its latest report lowers the temperature in US-Swiss relations but doesn’t change the policy equation for the SNB. Having designated Switzerland a currency …
19th April 2021
The delayed start to deliveries of the J&J vaccine is yet another blow to the rollout in continental Europe and on its own could delay things by at least one month compared to a situation in which the recent pace of vaccinations is sustained. This Update …
14th April 2021
The comparative success that the Danish government has had in handling COVID has allowed it to start to re-open the economy, despite the painfully slow progress on the vaccine front. Most economies in Europe are not as well placed, however, so their …
6th April 2021
This morning’s decision by the Swiss National Bank to keep its policy settings unchanged came as no surprise. The prospect of further falls in the franc should allow the Bank to largely stay out of the FX market, but the policy rate will remain rooted at …
25th March 2021
The EU’s tougher stance on vaccine exports might help to secure some concessions and additional doses from the UK. But it will do nothing to combat vaccine hesitancy in parts of the bloc and is unlikely to significantly boost the rollout in Europe. This …
24th March 2021
As we expected, the Norges Bank laid the groundwork this morning for the start of a tightening cycle, later this year. But we think it will raise interest rates sooner and faster than it currently projects. This morning’s decision by the Norges Bank to …
18th March 2021
A new wave of coronavirus cases in Europe, and the pause in usage of the AstraZeneca vaccine, raises the risk that the EU will fall even further behind the UK and US in its recovery from the pandemic. Europe is falling behind in the race between …
17th March 2021
The recent technical adjustments to the Danish Nationalbank’s monetary toolkit simplify the policy framework and are not intended to alter the policy stance. But with the Danish krone at its strongest level against the euro since September 2017, and at a …
12th March 2021
The underwhelming vaccine rollout in Europe will probably delay the easing of restrictions and means that the best of the vaccine bounce will be pushed into Q3. That said, the planned EU-wide vaccine passport offers a lifeline for tourist-dependent …
2nd March 2021
The recent fall in the Swiss franc against the euro will be music to the SNB’s ears, and we think that there is plenty of scope for the currency to drift lower over the coming years. Having traded in a narrow range around CHF 1.08 over the past six months …
24th February 2021
We forecast the Norges Bank to be the first advanced central bank to begin raising interest rates, in the second half of this year. This will further bolster the krone, which we expect to be the best-performing G10 currency in 2021, and will drive the …
17th February 2021
This morning’s announcement that the Riksbank left its policy settings unchanged will have come as a surprise to no one. Policymakers are in no rush to raise the repo rate from zero, but there are likely to be differences in opinion about how to proceed …
10th February 2021
As expected, the Norges Bank left its policy rate on hold at a record low of zero once again this morning and reiterated that it “will most likely remain at today’s level for some time ahead”. This supports our view that, while we expect Norway to be …
21st January 2021
Our working assumption is that the vaccine rollout proceeds fast enough for governments to start lifting restrictions in April and that the majority are lifted during May and June. This Update sets out these assumptions in more detail and discusses the …
13th January 2021
We expect both the Swedish krona and the Norwegian krone to appreciate against the euro and the dollar in 2021. However, in contrast to 2020, we expect the NOK to outperform the SEK slightly this year. The fortunes of the Swedish krona and Norwegian krone …
7th January 2021
While it’s still early days, the underwhelming start to vaccinations in mainland Europe lends support to our view that governments won’t lift most of the restrictions until May/June (see here ), and the uneven start suggests that some countries will make …
Yesterday’s approval of the first vaccine by European authorities marked the start of the roll-out of COVID-19 vaccines in the EU, which we expect to lead to a lifting of restrictions in Q2. However, the gradual pace at which production is being ramped …
22nd December 2020
As was widely expected, the Norges Bank left its policy rate on hold at zero this morning. However, it brought forward the projected start of rate hikes and signalled that it will retighten macroprudential policy next year, which confirms our view that …
17th December 2020
This morning’s decision by the Swiss National Bank to keep its policy settings unchanged was pretty much a foregone conclusion. Looking ahead, the SNB will brush off being branded a ‘currency manipulator’ by the US Treasury but is still likely to be less …
Following the run of positive news on the vaccine front, we now expect Switzerland and the Nordic economies to regain pre-virus levels in late 2021. Nonetheless, policymakers will be in no rush to tighten. We recently upgraded our economic forecasts for …
27th November 2020
The announcement this morning by the Riksbank that it has left the repo rate on hold at zero was never in doubt, and positive news on the vaccine front means that we no longer expect it to cut back into negative territory next year. However, the expansion …
26th November 2020
The news that mutated versions of SARS-CoV-2 have been transmitted from minks to humans in Denmark has raised fears that the goalposts for a vaccine may have already shifted. This Update answers six key questions about the new strain of the virus and its …
11th November 2020
As expected, the Norges Bank did not set off any fireworks this morning, and the decision to leave its key interest rate on hold at zero was never in doubt. The economy is likely to prove comparatively resilient during the second wave, but we still expect …
5th November 2020
While Switzerland has not yet followed France and Germany in announcing a new national lockdown, we now expect GDP to contract in Q4, broadly in line with the euro-zone. Meanwhile, although the Nordics economies will remain comparatively resilient, we …
4th November 2020
We think that the Swedish krona will appreciate a little further against the euro and the dollar in 2021, but doubt that it will remain one of the best-performing G10 currencies, as it has been this year. The Swedish krona has been the …
2nd November 2020
We think that Swiss policymakers would be prepared to match any small interest rate cut by the ECB, albeit reluctantly. However, if policymakers in the euro-zone opt to ease policy in other ways, as we think is more likely, this may help to reduce …
22nd October 2020
The further slowdowns in monthly GDP growth in Norway and Sweden in August support our view that it will take a long time for output to recover to pre-crisis trend levels anywhere in Europe. The 0.6% m/m increase in mainland Norwegian GDP in August was …
8th October 2020
Although the SNB meets the US Treasury’s criteria for a “currency manipulator”, we doubt this would deter it from intervening further in the foreign exchange market if required to keep the franc stable. New data detailing the SNB’s FX transactions confirm …
7th October 2020
Although the Norwegian krone has been the worst performing G10 currency so far in 2020 (see Chart 1), we expect it to make up some lost ground in 2021 even if it falls a bit more in the near term. The US dollar rose sharply against most other G10 …
29th September 2020
The fact that policymakers at the SNB and the Norges Bank left policy settings unchanged this morning came as no surprise. Both banks are likely to leave policy unchanged throughout our forecast horizon and, in the case of the SNB, probably until at least …
24th September 2020
Sweden has so far avoided a second wave of virus cases and the prospect of it sticking to its light-touch approach, rather than tightening restrictions in line with much of Europe, means that the risk of a renewed drop-off in economic activity in Q4 is …
22nd September 2020
The Riksbank’s decision to leave the repo rate on hold at zero this morning was never in doubt, but it left the option of a rate cut firmly on the table, linking it explicitly to moves in inflation expectations. We think it more likely than not that the …
While Sweden’s economy got off relatively lightly in H1 thanks to the light-touch lockdown, Norway and Finland saw even smaller falls in activity at a lower human cost. Nonetheless, the success of the Nordics does not offer any obvious lessons for those …
26th August 2020