Norway: Underlying inflation to remain well below 2.0% - TDS

Analysts at TDS suggest that the March inflation data of Norway should see underlying inflation remain well below the Norges Bank's 2.0% target, but headline inflation remain above.

Key Quotes

“We look for CPI-ATE to edge a touch lower, from 1.4% (actually 1.35%) in Feb to 1.3% in March (mkt 1.4%), which would leave the Q2 average a few bps below what the Norges Bank had forecast in last month's MPR. Headline inflation should be stronger though, especially with the growing contribution from electricity prices the last couple of months.”

“The Norges Bank hasn't particularly cared about the continual downward surprises to inflation, but we will be keeping a closer eye on the currency over the next several months, as we think that any unwanted strength in NOK could force the Norges Bank to eventually delay its first rate hike from Q3 to Q4.”