Norway Inflation Beats Estimates as Central Bank Nears Hike
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Norwegian inflation surged well above the policy target in February, providing fuel for the central bank’s ambitions to “most likely” raise rates again next week.
Annual underlying inflation was 2.6 percent in February, Statistics Norway said Monday. That beat the 2.1 percent estimate in a Bloomberg survey of economists, as well as the central bank’s own forecast of 2.2 percent.
- Norges Bank is preparing to raise rates again in March after delivering the first tightening in more than seven years in September. In its latest monetary policy report, the bank lowered its long-term rate forecast on the back of slower growth among its trading partners and lower oil prices.
- In the latest monetary policy report, the bank said that a weaker krone will keep inflation higher than previously predicted.
- Norges Bank is to release its next monetary policy decision on March 21, together with new forecast and policy guiding. The bank said in December it will “most likely” raise rates again in March, lifting the key rate by 25 basis points to 1.00 percent.
What Economists Say
- “The monthly figures are volatile, but developments over the past three months have been significantly higher than assumed in the December Monetary Policy Report. Turning to the upcoming policy rate meeting, elevated inflation coupled with still solid GDP growth are the key factors behind the call for another rate hike by Norges Bank,” Handelsbanken economist Marius Gonsholt Hov.
- The krone strengthened 0.6 percent to 9.7823 per euro as of 8:34 a.m. in Oslo.
- For more details on inflation, see this table.
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