The global marathon of rate hikes could continue in the Nordic countries
On Thursday, the Swedish Riksbank could deliver a new quarter-point salvo, thus taking its key rate at 4.25% to fight inflation or not, depending on who you listen to.
Economists and investors are divided on the outcome, with some saying Swedish authorities could instead choose to increase asset sales, while signaling they could increase sales again early next year.
The split could well extend to the Riksbank board, which has been unanimous on all but one rate decision since Erik Thedeen became governor in January.
Norway’s central bank, the first of the group of 10 major monetary jurisdictions to start raising rates, may take some comfort from lower expectations for price rises and wage growth. However, further tightening is possible with the December 14 decision, particularly after a recent acceleration in underlying inflation.
Compared to their counterparts such as the Federal Reserve, the European Central Bank and the Bank of England, the Nordic countries are particularly focused on foreign exchange pressures. more expensive goods. Although the currency has recently strengthened, it remains vulnerable to deterioration. Similarly, in Norway, the weak krona, along with recent consumer price data, has led some economists to revise their forecasts of unchanged rates in favor of an increase. “An increase in December is fully underway,” Dane Cekov and Kjetil Olsen, analysts at Nordea Bank Abp, recently predicted.
A Nordic peer could keep rates unchanged this week, but only because it has already done so much. On Wednesday, the Icelandic central bank is expected, in its own survey of market agents, to keep the benchmark index at 9.25%. This is also the outcome predicted by two of the island’s biggest lenders, Landsbankinn and Islandsbanki.
Policymakers there were the first in the advanced world to begin raising rates after the start of the pandemic, as early as May 2021.
Central bank reports from the US, Eurozone and Australia, advanced world purchasing managers’ indices and the UK budget report are among the highlights of the week ahead.
