Inflation – mind the gap
The July inflation readings are due out on 10 August. We share the consensus forecast of core inflation at 1.2%, unchanged from last month, while Norges Bank’s forecast is 1.4%.
If we are right, the gap between Norges Bank’s forecast and actual inflation and will shrink from ½ to ¼% point. In that case the domestic arguments for a rate cut disappear. However, we doubt it will have any impact on the market, which is pricing in a rate cut late this year. That view is probably not based on the domestic economy
But what happen if we are wrong and what about NOK ? Read the full report: