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Fast Comment NorwayCPI-ATE a touch above expectations; deviation too small to affect the key policy rate

  1. CPI-ATE rounded up to 2.2 percent in September; marginally above expectations
  2. Deviation too small to affect the trajectory of the key policy rate path
  3. We continue to believe the base case is for Norges Bank to keep its policy rate on hold
CPI-ATE rounded up to 2.2 percent in September; marginally above expectations
Core inflation, as measured by the CPI-ATE, rose marginally to 2.2 percent in September, up from 2.1 percent in August. We, consensus and Norges Bank had expected 2.1 percent. The deviation is by all means negligible. And even more so given the fact that it was a rounding that pulled it up to 2.2 percent in September; the CPI-ATE was 2.15 percent before rounding versus Norges Bank’s estimate of 2.11 percent. Note that the CPI-ATE has fallen sharply from its peak of 2.6-2.7 percent, which was reached in March and April, and is currently hovering around target. The CPI-ATE is also expected to stay close to the target in the near term, thus the key policy rate path is more dependent on the growth outlook and how that is affected by the global slowdown, in our view. The global backdrop has deteriorated further since Norges Bank’s decision in September, which further dampens the scope for more rate rises by Norges Bank. We continue to believe the base case is for Norges Bank to keep its policy rate on hold for the foreseeable future.


Disclaimer

Marius Gonsholt Hov

Senior Economist

Norway

maho60@handelsbanken.no

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