Norway and Sweden Lower Rates, BoE Rate Decisions Awaited

Bridgette Randall
19 Jun, 2025
London

European markets traded down amid growing likelihood of expanded U.S. involvement in Israel's attacks on Iran. 

Benchmark indexes in Frankfurt, Paris, Milan, and London edged lower, and the euro traded near recent multi-month highs amid the fading luster of the U.S. dollar-denominated assets. 

U.S. policymakers and military planners are evaluating possibilities of a strike on Iran's nuclear infrastructure, but the specter of false and misleading narratives in the build-up to the Iraq War haunts them. 

The total cost of the Iraq War is estimated to surpass one trillion dollars, including the support costs of wounded military personnel.

The U.S. Federal Reserve held its key lending rate range unrevised, citing tariff-driven inflation. 

The Federal Reserve Open Market Committee held steady the federal funds rate range between 4.25% and 4.50% for the fourth meeting in a row. 

The Bank of England is widely anticipated to hold its policy rate unchanged at 4.25%, following a rate cut of 25 basis points on May 8.

On Wednesday, the Norges Bank lowered its policy rate by 25 basis points to 4.25%, and the central bank signaled additional rate cuts if future economic data supports the move. 

"The Committee judges that a restrictive monetary policy is still needed but that it is now appropriate to begin a cautious normalization of the policy rate," the accompanying statement from the central bank noted. 

The policy rate is likely to drop to 4% by the end of 2025 and ease to 3% towards the end of 2028, according to the statement released by the central bank.

 

Europe Indexes and Yields

The DAX index decreased by 0.5% to 23,197.63, the CAC-40 index edged lower 0.5% to 7,616.20, and the FTSE 100 index declined 0.4% to 8,811.70.

The yield on 10-year German bonds inched higher to 2.53%, French bonds increased to 3.27%, UK gilts moved up to 4.55%, and Italian bonds edged higher to 3.54%.

The euro decreased to $1.15; the British pound was lower at $1.34; and the U.S. dollar was higher and traded at 82.11 Swiss cents.

Brent crude increased $0.67 to $77.37 a barrel, and the Dutch TTF natural gas was higher by €0.90 to €39.94 per MWh.

 

Europe Movers

Kering SA dropped 1.7% to €177.62, LVMH declined 1.3% to €458.15, and Hermes International SCA fell 1.7% to €2,243.0. 

BP plc increased 1.6% to 392.45 pence, Shell PLC increased 1.3%, and TotalEnergies added 1.9% to €54.79. 

Stora Enso OYJ soared 17.5% to €9.90 after the Finnish forest company announced a strategic review of its forest assets.