**As seen in Risk In The Week report 05/05/24, subscribe at cablefxm.co.uk/reports
Norway March consumer prices extended prior
disinflationary progress as underlying CPI-ATE rose 4.5% Y/
y, this was slower than the prior 4.9% and the consensus
forecast of 4.7%. Headline CPI rose 3.9% vs the estimate of
4.2%, the month was supported by clothing, household, and
restaurant prices. There was a decent 1.9% M/m downtick in
food prices marking the second consecutive monthly
decline. The report raised hopes that we could see the
Norges Bank easing somewhere this year, and the market
lifted expectations for a September cut. And while the pace
of inflation is faster than G10 peers, the direction is pointing
to slower price prints, unlike the U.S. where prices have
stalled.
Despite progress in inflation, Commerzbank analysts noted
the Norwegian central bank holding to a cautious stance
during its May monetary policy meeting. The Norges Bank
left its policy rate unchanged at 4.50%, as expected, but
communications showed the central bank may need to hold
a restrictive policy rate for longer than it had previously
expected. Commerzbank flagged that the Norwegian central
bank didn't even rule out a further interest rate hike as they
tried to meet the price mandate. April inflation data will help
determine if the September meeting is completely off the
table and rate cut expectations are pushed forward into
November, Commerzbank wrote.
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