Weekly Focus: The Fed on Course for Rate Hikes

Danske Bank now forecasts Federal Reserve rate hikes in late 2026 and early 2027 due to AI-driven growth and structural inflation. Meanwhile, the Iran war continues to threaten global supply chains and keep oil prices elevated.

Key Takeaways

• 1.Danske Bank has adjusted its Fed call, now expecting 25bp rate hikes in December 2026 and March 2027 rather than cuts.
• 2.The closure of the Strait of Hormuz due to the Iran war is a major upside risk to oil prices and structural inflation.
• 3.The USD debasement narrative is fading, with renewed Fed tightening expected to support the dollar, leading to a lowered EUR/USD forecast of 1.12.

Table of Contents

• The Fed on course for rate hikes
• Key global views
• Key market movers
• Selected reading from Danske Bank
• Market Movers Scandinavia
• Scandi Update
• Denmark – moderate inflation and resilient growth despite higher energy prices
• Sweden – Labour market is improving
• Norway – Entering stagflation?
• Calendar – 25-29 May 2026
• Macroeconomic forecast
• Financial forecast
• Disclosures

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