Sweden and the UK Hold Rates Steady, Switzerland Lowers Rates by 25 bps

Bridgette Randall
20 Mar, 2025
London

European markets lacked direction in Thursday's trading as investors reviewed the latest monetary policy decisions. 

Benchmark indexes in Frankfurt, Paris, London, and Milan decreased, and central banks of the UK, Switzerland, and Sweden announced their rate decisions. 

The Bank of England held its policy rate unchanged, and policymakers cited global trade uncertainties and high inflation. 

The monetary policy committee, in an 8-to-1 vote, decided to leave the bank rate at 4.5%, as members decided to wait for additional data on inflation. 

Consumer price inflation rose to 3% in January, and retail inflation is expected to accelerate to as high as 3.75% by the third quarter of 2025. 

The committee also noted elevated geopolitical uncertainties and a brewing global trade war, adding another layer of volatility to stock prices. 

The Swiss National Bank lowered its benchmark rate by 25 basis points to 0.25% effective March 21, citing weakening inflation. 

The accompanying statement noted retail inflation eased to 0.3% in February from 0.7% in November, and the policy committee reiterated its inflation outlook for 2025. 

Retail inflation is estimated to hover at 0.4% in 2025, 0.8% in 2026, and 2027.

Sweden's Riksbank held steady its interest rate, and added that the labor market recovery may lag expectations. 

The Executive Board decided to hold policy rate at 2.25%, and signaled that rates are likely to stay at "this level going forward."

The Swedish economy is recovering at a moderate pace, and the estimate of the annual growth in 2025 was revised higher to 1.9% from the previous estimate of 1.8%. 

The jobless rate is likely to hover near 8.7% compared to 8.4%, and retail inflation is at 1% from the previous estimate of 0.6% released in December, respectively. 

 

Europe Indexes and Yields

The DAX index decreased by 0.2% to 23,232.97, the CAC-40 index edged lower by 0.2% to 8,156.19, and the FTSE 100 index advanced by 0.4% to 8,740.37. 

The yield on 10-year German bonds inched lower to 2.77%, French bonds decreased to 3.45%, the UK gilts moved down to 4.64%, and Italian bonds edged lower to 3.82%.

The euro decreased to $1.09; the British pound was lower at $1.30; and the U.S. dollar was lower and traded at 87.74 Swiss cents.

Brent crude increased $0.43 to $71.21 a barrel, and the Dutch TTF natural gas was higher by €0.09 to €44.02 per MWh.

 

Europe Stock Movers

Sodexo SA declined 17% to €59.60, and the French catering company lowered its full-year revenue and margin outlook amid a slowdown in North America. 

The food service company lowered its organic revenue growth outlook to between 3% and 4%, compared to the previous estimate of between 5.5% and 6.5%, citing weaker volumes and postponement in contracts. 

Consolidated revenue in the first quarter of fiscal 2025 increased 3.1% to €12.5 billion.

Net profit from continuing operation decreased 12.5% to €434 million, but underlying net profit from continuing operations increased 5.4% to €450 million. 

Prudential plc increased 0.3% to 776.46 pence, and the company announced a health insurance joint venture with India-based HCL Group.

RWE AG decreased 3.8% to €31.80, and the German renewable energy company said it plans to cut investment by 20% over the remainder of this decade, citing policy uncertainty in the U.S. 

"We now plan to make total net investments amounting to €35 billion in the six years from 2025 to 2030. This is about a quarter less than the sum we had originally envisaged for this period. 

Despite the lower capital expenditure, we still expect to be able to achieve an adjusted net income per share of about €3 in 2027.

The target for 2030 remains in the order of €4 per share," said Dr. Markus Krebber, chief executive of the company, in a letter to shareholders. 

Stratec SE dropped 5.5% to €26.90 after the clinical equipment maker postponed the release of its annual report.