At Any Rate Global Rates: Scandi Central Banks and noisy UK politics
Sep 26, 2025
Khagendra Gupta, a Rates strategist at J.P. Morgan specializing in Nordic markets, joins Francis Diamond to dive into the latest central bank decisions impacting Scandinavia. They dissect the Riksbank's recent 25bp cut and its implications for core inflation and Swedish yields. Khagendra also sheds light on an unexpected Norges Bank cut and its forecast shift. The duo wraps up discussing the potential ripple effects of UK political dynamics on rates, highlighting that current Labour leadership speculation is unlikely to cause immediate market reactions.
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Riksbank Cut Raises The Bar For More Easing
- The Riksbank's 25bp cut to 1.75% raised the bar for future cuts and implies on-hold pricing ahead.
- Markets now price near-zero further cuts with a small chance of a hike late 2026, supporting short-end carry.
Temporary VAT Cut Will Lower Swedish Core Inflation
- Core CPIF (ex energy) is ~3% but base effects and a VAT cut on food will push core inflation sharply lower next year.
- Downside risks to Swedish inflation and growth remain, yet the Riksbank requires clear weakness to cut again.
Use Short-End Carry In Sweden
- Front-end Swedish rates look attractive for carry as the Riksbank likely stays on hold for months.
- Consider carry trades at the short end where hold cycles and stable policy support returns.