In focus today
In Norway, we expect Norges Bank (NB) to keep the policy rate unchanged at 4% at today’s meeting, in line with market expectations. Due to the great uncertainty and fluctuations in financial factors related to the situation in the Middle East, we expect NB to signal an unchanged policy rate until there is more information about the development in energy prices and the consequences for inflation. We expect NB to emphasize that they are ready to hike the policy rate if inflation remains high or rises. We expect the rate path in the Monetary Policy Report to show an unchanged policy rate for the rest of the year, followed by a cautious decline in the coming years. The risk is on the upside, as the rate path could indicate a certain probability of a rate hike later this year, driven by an increase in global rate expectations.
In Sweden, trade balance and household lending data for February will be released.
In the European Parliament, MEPs will vote on advancing the EU-US Turnberry trade deal amid uncertainty surrounding tariffs. The deal includes safeguards such as ensuring the pact takes effect only when the US commits to the agreed 15% tariff ceiling and a solution for steel and aluminium. If cleared in parliament, it moves to member state negotiations.
Economic and market news
What happened yesterday
In Sweden, the Riksbank Minutes revealed a board slightly divided on how to deal with supply shocks. Seim and Thedéen are open to frontloaded rate hikes, whereas Jansson, Bunge, and the newest member, Hjelm promote a gradual, wait-and-see approach. Hjelm prefers to see through the supply shocks, even in an adverse scenario. Like Jansson, Hjelm warns against overreacting, emphasising the risks of a policy U-turn. Our conclusion is that the Riksbank will show high readiness to act in May if the conflict persists and continues to impact intermediate goods. The money market shaved off 5-6 basis points from the 2026 curve. Read more in Riksbank Minutes – March 2026, 25 March.
The NIER survey was a mixed picture, with the overall ETI index remaining basically flat, manufacturing showing some improvement, and consumer confidence deteriorating. Retail price plans were largely unchanged.
In Germany, the Ifo index for March showed the same picture as the ZEW index with expectations falling significantly but the current situation holding up. Expectations declined to 86.0 as expected from 90.2 while the assessment of the current situation remained at 86.7 which was better than expected. The war in Iran is thus yet to affect growth in Germany, but it is clearly expected to have a negative effect in the coming months. However, the decline in expectations is significantly lower than what happened at the onset of the war in Ukraine in 2022.
In the UK, February inflation data figures aligned closely with expectations, with headline at 3.0% y/y, core at 3.2% y/y, and services at 4.3% y/y. This confirms that the disinflationary trend remains largely intact. However, data is quite outdated, as investors are now leaning towards a rate hike from the Bank of England in April.
Oil prices climbed above USD 100/bbl amid once again conflicting headlines from the Middle East. Iran dismissed the US-proposed ceasefire plan as ‘excessive’ and set forth demands, including authority over the Strait of Hormuz and war compensation. Strikes continued across the Gulf region this morning.
Equities: Equities continued higher yesterday, Stoxx 600 up 1.4% and S&P 500 up 0.5%. This was a geopolitical reversal trade, with cyclicals outperforming defensives, yet a selective one, as investors are at best cautiously optimistic. Materials, health care, consumer discretionary and industrials up 1-2%. Oil prices have edged somewhat higher again over night and as a result, Asian markets are down 1-2% this morning. US and European equity futures are -0.5% lower this morning.
Interesting dynamics in the tech space yesterday. Big tech mostly higher, along with semis and memory companies, while the software space was weaker again. Trigger for the move was Broadcom out yesterday saying that is experiencing significant supply chain constraints due to surging AI chip demand straining production capacity. These pressures are now spilling over beyond semiconductors into PCBs and other components, with capacity limitations pushing lead times from approximately six weeks out to six months. If a company of Broadcom’s scale is running into these constraints the situation further down the value chain is likely to look even more challenging. Similarly, CPU giants Intel and AMD notified customers of price increases. The backdrop is the same story, with worsening supply constraints pushing delivery lead times from 1-2 weeks to 12 weeks or longer. This is a theme to monitor closely ahead of the upcoming Q1 earnings season, as a shortage of components could impact many sectors.
FI and FX: Yesterday was relatively quiet in FX and FI markets. Brent crude traded around the USD100/bbl level, NOK and SEK rebounded slightly and yields fell as the market was relieved of a day with no major news shocks from the Middle East. EUR/USD continued to trade around the 1.16 level.
 to keep the policy rate unchanged at 4% at today's meeting, in line with market expectations. Due to the great uncertainty and fluctuations in financial factors related to the situation in the Middle East, we expect NB to signal an unchanged policy rate until there is more information about the development in energy prices and the consequences for inflation. We expect NB to emphasize that they are ready to hike the policy rate if inflation remains high or rises. We expect the rate path in the Monetary Policy Report to show an unchanged policy rate for the rest of the year, followed by a cautious decline in the coming years. The risk is on the upside, as the rate path could indicate a certain probability of a rate hike later this year, driven by an increase in global rate expectations.){kind=link}