Riksbank Takes Hawkish Stance, While Norges Bank is More Balanced, BofA Says

BofA Global Research’s view on the Riksbank and Norges Bank suggests a more hawkish stance from Sweden’s central bank, while Norges Bank is more balanced and has guidance for a March cut, according to a note released on Thursday.

The Riksbank’s rate cut to 2.50% was expected, according to BofA but the 2025 guidance was more hawkish than anticipated, with just one further cut projected in 1H25.

BofA sees Norges Bank’s core inflation forecasts for next year more realistic now, however, still expects a quarterly cutting pace from March, but risks are still biased for less.

In FX markets, BofA finds the SEK’s strength understandable but believes it is overdone, while expecting the NOK-SEK rate to rise, with both currencies vulnerable to external pressures like tariffs.

“We expect relative monetary policy to push NOK-SEK a little higher from here, and we still find the bar of it low or roughly fair for both NOK and SEK vs. the EUR. Riksbank-aside, SEK strength seems overdone to us,” it said in the note.

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