Central Banks in Sweden and Norway maintain unchanged interest rates amidst global chaos.
In the evolving global economic landscape, the recent shifts in US trade policy have raised significant concerns for European countries such as Sweden and Norway. The escalation of tariffs, including doubling steel and aluminum tariffs to 50%, and the implementation of reciprocal tariffs up to 20% or more on the EU, have heightened trade policy uncertainty [2][3].
This uncertainty has led to a weaker US dollar, which has appreciated by approximately 10% against a basket of major currencies. The Swedish crown and Norwegian krone have benefited from this depreciation, strengthening by 14% and 12% respectively against the dollar, their strongest gains in decades [1].
While the stronger currencies have eased inflationary pressures from US imports, the uncertainties from US tariffs could potentially weigh on investment and growth prospects. The close trade relationship between Norway and Sweden, with Norway exporting heavily to Sweden, predominantly crude and refined petroleum and fish products, and Sweden exporting significant goods and services to Norway, means that US tariffs that disrupt global energy markets or raise input costs could have nuanced effects on their economic activity [4].
The Riksbank, Sweden's central bank, has stated that waiting for more information is "wise" to get a clearer picture of inflation and economic activity. Similarly, Pål Longva, Norges Bank deputy governor, has expressed concerns about the extent of trade barriers [5]. Both banks have suggested a slight easing of monetary policy due to a somewhat likely lower inflation, but the uncertainty surrounding future trade policies and their potential impact on inflation and economic activity remains considerable [1][2][4].
Inflation in Norway remains above its two-percent target, while Swedish inflation reached 2.3 percent in March. However, there is "considerable uncertainty" about the direction of Swedish inflation, and Longva also mentioned uncertainty about future trade policies [1][5].
As the global economy navigates these uncertainties, it is clear that the US trade policy shifts in 2025 have indirectly influenced Sweden and Norway. The balance between cost pressures and exchange rate benefits will be a key factor in understanding the long-term impact on their economies.
The uncertainties from US tariffs have raised concerns about potential impacts on investment and growth prospects in Sweden and Norway, making it crucial for both the Riksbank and Norges Bank to closely monitor the situation. This is because finance and business activities in these countries are intrinsically linked to global markets, particularly those affected by US trade policy shifts.
