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.
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.