This study researches how changes in central bank policy rates influence stock market returns across the Nordic countries during the period 2020 through 2025. The Nordic countries included in the study are Sweden, Denmark, Norway and Finland. The data was collected from LSEG Refinitiv Workspace along with data from OECD, FRED, Eurostat and the respective Nordic central banks. The statistical analysis was conducted using RStudio. To research the relationship between monetary policy rate and stock market returns, the study uses a panel fixed effects regression model with individual country OLS regression.

The results of this study show that policy rate changes do not have a statistically significant effect on Nordic stock market returns in the panel fixed regression model. In contrast, the individual country regression shows a significant negative relationship between policy rate changes and stock market returns in Norway. The panel regression reveals a statistical negative association between inflation and stock market returns while GDP presents a positive coefficient but is insignificant. The COVID-19 crisis variable also presents a positive and statistically significant effect within the panel model.

The findings are supported by previous research and theoretical framework. This further suggests that stock market reactions to monetary policy may differ depending on market structures and macroeconomic conditions across the Nordic countries.