Inflation up – from the temporary dip
The May inflation readings are due out on 11 June. It will be the last important domestic news before Norges Bank publishes its new interest rate forecast the 20 June. We expect core inflation (CPI-ATE inflation) to rebound to 1.2% y/y after the low April figure. That is in line with Norges Bank’s view and nothing much would probably happen in the market (but consensus is not yet known). If inflation, contrary to our forecast, should rebound fully after the April drop core inflation will be 1.5%. In that case NOK should strengthen and forward rates rise.