Norway’s central bank expected to hold rates as Swedish cut looms

Published 18/06/2025, 09:52
Norway’s central bank expected to hold rates as Swedish cut looms

Investing.com -- Norges Bank is expected to maintain its current interest rate levels at its upcoming meeting, as Norway’s economy shows resilience despite high rates. Following a hawkish pivot at its last meeting, Norway’s central bank will likely delay its first rate cut until later this year, according to Citi analysts.

The Swedish Riksbank, in contrast, is expected to cut rates by 25 basis points, responding to softening economic data. This comes after the Swedish central bank had previously indicated in March that its rate-cutting cycle was complete. Nordic Economics forecasts another 25 basis point cut after summer, suggesting this week’s anticipated reduction won’t be the last.

The Swedish krona (SEK) faces potential weakness from the expected rate cut, as rate differentials may move against it. Markets are currently pricing in a small risk of deeper cuts beyond this week’s meeting, and any guidance acknowledging further cuts could put additional pressure on the currency.

Sweden has recently seen a significant unwinding of its North American equity holdings, suggesting that reallocation and hedge ratio adjustments—previously supporting the krona—may be largely complete. This development removes one of the two major tailwinds that had been supporting SEK this year.

European defense stocks, another previous support for the krona, have struggled in recent weeks despite major escalations in conflicts in Ukraine and the Middle East. Next (LON:NXT) week’s Paris Airshow could provide a positive catalyst through major deals and announcements, but continued weakness in EU defense names could indicate an exhaustion point that may further pressure the Swedish currency.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.