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Erik Johannes Bruce, analyst at Nordea Markets, suggests that Norway’s inflation figures over the summer should not prevent Norges Bank from providing a clear signal of a September hike at the in-between meeting in mid-August.

Key Quotes

“Since the last Norges Bank’s meeting, we have not received that many domestic figures. But if anything, unemployment figures and the latest housing prices were on the strong side to Norges Bank’s forecast (to those scared by the recent drop in Norway manufacturing PMI, Norges Bank ignore it). Add the truce in the “trade war” and a NOK still somewhat on the weak side to the forecast and news so far clearly points to a September hike.”

“And of more immediate interest, a clear signal of a September hike on the in-between meeting in August. A signal which should be hawkish to the market.”

“However, we are to receive two inflation figures before the August meeting. Our forecast is for core inflation to remain in the range 2 ¼ – 2 ½% close to Norges Bank’s forecast at 2.4% for both months. But the summer figures are tricky. Especially July has surprised strongly before. However, an eventual downside surprise should be very strong for it to make Norges Bank start doubting a September hike.”