April 09, 2021
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Norway: CPI surprise, surprise

  • Inflation surprised on the downside this month, mostly due to household energy bills, but with clothing and airfares also disappointing.
  • The recent shift in Norges Bank signalling towards a potential tightening in 2021 looks exposed to us, as we are more cautious on the pace of exit from pandemic restrictions.

March 18, 2021
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Norges Bank: The end of ZIRP

  • The Norges Bank MPC unsurprisingly kept the policy rate at zero, however, the real news is the introduction of tightening pressure within its 2021 policy rate projections. Such hawkish revisions were flagged by our model as a reflection of reduced spare capacity.
  • There are three reasons for the Norges Bank’s hawkish stance: an improvement in global economic prospects; the vaccination rollout in Norway is proceeding faster than expected; ZIRP with an overheating housing market is an inappropriate combination.

March 10, 2021
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Norway: CPI energised above consensus

  • CPI inflation rose by 3.3% y-o-y in Feb-21, above the final consensus forecast of 3%, but very close to our forecast. Basket re-weighting to reflect pandemic consumption patterns continues to impact the data.
  • The Norges Bank is likely to show some flexibility in its response to these numbers, and it will update the market with its Monetary Policy Report on Thursday 18 March.