The Swedish economy is likely to shrink this year, as tight monetary policy weighs on domestic demand and the export industry. Inflation is falling, and we expect Riksbank to cut interest rates next year, providing some relief for challenged households and businesses. Still, the coming years will be characterised by subdued economic trends and rising unemployment as households and businesses adjust to a permanently higher interest rate level.
The Norwegian economy is cooling down as households and house prices start to feel the pinch of rate hikes. We expect Norges Bank to reach its peak policy rate of 4.25% in September. But don’t expect inflation to fall towards its 2% target anytime soon.
On a separate note: We change our forecast of the Riksbank’s policy rate in. We now expect the policy rate to peak at 4.25%. Expect 25bps rate increases in September and November. Previous forecast had seen the Riksbank's peak rate at 4.0%, do not see rate cuts until 2H 2024.
- Nordea
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