Despite hawkish moves from the ECB and Fed, the Riksbank can afford to hold rates. A temporary VAT cut has created an artificially low inflation reading, giving them the "luxury of not rushing into your hike" even though external pressures will likely force a hike by year-end.
While Norges Bank forecasts an almost immediate reversal of its rate hikes after peaking, sticky inflation and currency pressures suggest a different outcome. The analyst expects a longer pause at the peak rate than what the central bank or current market pricing indicates.
The Bank of England's current patience on rates is not a dovish pivot, but a tactical wait for concrete data on "second-round effects" like wage and price surveys. They are trying to avoid tightening too late, suggesting a hike is still likely once this evidence emerges later in the year.
Despite a major by-election result opening the door for a new Prime Minister, UK gilt markets remain largely unmoved. This demonstrates that bond markets will only price in a political risk premium when there are clear and immediate implications for fiscal policy, which is not yet the case.