Research
Tip: To personalise the research list, click the gear symbol above.


Choose type:


Fast Comment NorwayCPI-ATE well above expectations; supporting further rate hikes in 2019 (March and September)

  1. CPI-ATE at 2.2 percent in November, against expectations of 1.9 percent
  2. The near-term momentum has been greater than anticipated by Norges Bank
  3. Notwithstanding increasing global uncertainties, Norges Bank will stick to its plan of hiking the policy rate twice in 2019
CPI-ATE at 2.2 percent in November, against expectations of 1.9 percent
Core inflation, as measured by the CPI-ATE, continues to be plagued by great volatility. After having dropped to 1.6 percent in October, following 1.9 percent in September, it rose sharply again in November, to 2.2 percent. The outcome was well above expectations. Consensus expected 1.9 percent, whereas we and Norges Bank had anticipated 1.8 percent. We had indeed signaled that risks were skewed to the upside, but still, the outcome breached the upper interval of what we deemed as a likely outcome. It should be stated that significant base-effects pulled up the annual rate in November. This was the case for prices for both food as well as air fares. But the effects turned out greater than anticipated. In isolation, prices for food and transport pulled up the CPI-ATE by as much as 0.6 percentage points (in y-o-y terms). Some of this may be temporary, and in any case we expect the CPI-ATE to drop down again in December due to a base-effect. Having said that, the near-term momentum has been greater than anticipated by Norges Bank. Norges Bank’s rate decision is due this Thursday, and we believe the front-end of the curve will remain intact; i.e, notwithstanding increasing global uncertainties, Norges Bank will stick to its plan of hiking the policy rate twice in 2019.


Disclaimer

Marius Gonsholt Hov

Senior Economist

Norway

maho60@handelsbanken.no

Latest analyses

2019-03-22

Fast Comment Norway

2019-03-22

Morgenrapport Norge

2019-03-21

Morgenrapport Norge