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Global Macro Comment

The lay of "The Land"

What do we really know about inflation? The state of the art was recently laid out by top academics and central bank economists at the "Inflation: Drivers & Dynamics" conference, held at the Federal Reserve Bank of Cleveland. In this comment we give a first-hand account of what was discussed in "The Land". The conference gave greater insight into the anchoring of inflation expectations at central banks' targets, mixed with a new understanding of inflation fundamentals. Change is often hard work, but policymakers would be smart to embrace these latest insights.

Global Macro Comment - The lay of "The Land"

Johan Löf

Senior Economist


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Fast Comment Sweden


Global Macro Comment


Fast Comment Sweden

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Macro Comment Norway — Norges Bank to stick with March strategy

In March, Norges Bank indicated that the policy rate would be lifted by September this year. Beyond that, the central bank expected six more rate increases by the end of 2021. Since March, inflation has once again disappointed; in isolation, this suggests a lower policy rate path. On the other hand, the real economy is showing few signs of faltering and the oil price and housing market have been stronger than expected. We believe Norges Bank will present a forecast for the policy rate that is little changed from March, still indicating that the first rate increase will come in September.

Kari Due-Andresen, Chief Economist Norway |

UK Comment — UK retail sales grew strongly in May

  1. Retail sales up 1.3 percent in May on the heels of strong growth in April
  2. Some of the strength in May was due to one-off effects
  3. Underlying consumption growth has strengthened, but not as much as May numbers could suggest

Kari Due-Andresen, Chief Economist Norway |

Fast Comment Sweden — May inflation above Riksbank target as positive energy price trend continues

  1. Inflation in line with expectations, and will rise further in June
  2. The energy price rise is no longer a temporary nuisance for the Riksbank
  3. Another sign that the Riksbank will indeed hike its policy rate in December

Johan Löf, Senior Economist |

Fast Comment China — The slowdown finally sets in

  1. Very weak activity figures in May
  2. Growth slowdown is here
  3. Monetary policy being eased rather than tightened

Bjarke Roed-Frederiksen, Senior Economist |

Fast Comment US — Fed hikes rates, signals two more rate hikes in the second half of this year

  1. Fed hikes rates as expected
  2. Two more rate hikes in the second half of this year signalled
  3. Policy rates higher than the long-run neutral rate in 2019

UK Comment — Labour market numbers broadly as expected

  1. Unemployment rate unchanged at 4.2 percent; regular pay growth down to 2.8 percent; total pay growth stays flat
  2. Year-on-year wage growth appears to have peaked and should decelerate further as base effect dissipates
  3. So far, numbers are fairly in line with the Bank of England's estimates

Kari Due-Andresen, Chief Economist Norway |