It is becoming increasingly clear that interest rates could rise as inflation pressures build, Kauppalehti reported today, citing Nordea CEO Frank Vang-Jensen, who points to energy markets and geopolitical tensions as key drivers.

His remarks add a more explicit macro view to Nordea’s first-quarter earnings release, which remained more restrained. The bank noted that markets were affected by “unexpected sharp increases in EUR and SEK interest rate expectations,” which “led to exceptional losses across certain desks.” 

“However, it is very difficult to say how much and how quickly interest rates will rise. Energy consumption is such a central part of the production of many goods and services, so changes in energy prices spread more widely across society, and then inflation accelerates and interest rates rise,” Vang-Jensen told Kauppalehti. “This has a negative impact on economic growth globally and also in the Nordic countries.” 

At the same time, uncertainty remains elevated. The pace and scale of rate increases will depend on how the geopolitical situation evolves and how persistent the energy shock proves to be.