Norway Inflation Above Central Bank Forecast Ahead of Hike

(Bloomberg) -- Norway’s inflation slowed less than estimated in April as the central bank zeros in on another rate increase next month.

Annual underlying inflation was 2.6% in April, beating a 2.5% estimate in a Bloomberg survey of economists. The central bank had forecast an annual pace of 2.3%.

Key Insights

• Norges Bank embarked on a tightening cycle in September, raising rates for the first time in seven years. It then raised its key rate to 1% in March and said on Thursday that it will “most likely” raise rates again in June.
• Norway’s central bank is weighing strong domestic economic data against a slowdown abroad. Inflation has surged above the policy target of 2%, driven by a weakening currency and strong labor market.

What Economists Say

• “Clearly, this confirms that the underlying trend in core inflation is upwards, and a bit higher than we have been expecting,” Danske Bank chief economist Frank Jullum said in an emailed comment.
• “Today’s figures support Norges Bank’s guiding yesterday for a rate hike in June,” DNB senior economist Kyrre Aamdal said in a note.
• “The inflation details were weaker than the headline, though, but nothing that will question Norges Bank’s plans for June,” Handelsbanken economist Marius Gonsholt Hov said in a note.

Markets

• The krone strengthened 0.14% to 9.8367 per euro as of 9:21 a.m. in Oslo, reversing earlier losses

Get More

• For more details on inflation, see this table.

To contact the reporter on this story: Sveinung Sleire in Oslo at ssleire1@bloomberg.net

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, Stephen Treloar

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