Last Thursday, the Swedish Central Bank (Riksbank) was expected to raise interest rates by another 0.25%, bringing the base rate to 4.25% to fight inflation.
Economists and investors are divided on the issue, with some saying Sweden could choose to extend its asset sales, while others think the Riksbank should consider raising interest rates early next year.
This division could spill over into the Riksbank itself. Before Erik Thedeen became governor earlier this year, there was consensus on policy.
Norway’s central bank — one of the first among the G10 to raise rates — may feel more comfortable with the inflation and wage data. Still, further tightening is likely in its December 14 decision, especially after a recent rise in core inflation.
Compared to peers such as the Federal Reserve, the European Central Bank and the Bank of England, the Nordic countries are particularly focused on foreign exchange pressures.
Sweden has seen some problems with the weak krona, which makes imported goods more expensive. Although the krona has strengthened recently, the currency remains vulnerable.
In Norway, the weak krone and recent consumer price data have prompted some economists to revise their stance from holding steady to raising interest rates. “A December hike is complete,” Nordea Bank Abp analysts Dane Cekov and Kjetil Olsen predicted.
Also in northern Europe, Iceland could still raise interest rates. Last Wednesday, the agency was expected to keep rates at 9.25%.
“We think the Riksbank will keep rates unchanged rather than tighten further. It’s a split decision. Most economists see a no-deal scenario,” said Selva Bahar Baziki, an economist at Bloomberg.
Elsewhere, the minutes of the Fed and ECB meetings are the upcoming data of interest.
The Federal Reserve will release the minutes of its last policy meeting on Tuesday. At a press conference after holding rates steady, Chairman Jerome Powell hinted that policymakers may still need more time to assess the situation. U.S. home sales are expected to remain weak in October as mortgage rates hovered near 8%. The U.S. government will report weekly jobless claims and October orders on Nov. 22. Friday's S&P Global manufacturing and services activity indexes will be the final data releases this week.
The Reserve Bank of Australia will release the minutes of its November 7 meeting on November 21. Governor Michele Bullock is scheduled to speak.
Thailand and Singapore are scheduled to report third-quarter gross domestic product, while Bank Indonesia is expected to keep interest rates steady on November 23.
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