Price inflation in Norway is expected to decline further. Big surprises are still needed for Norges Bank to give up on another rate hike later this year, believes Sarah Medgaard, economist at Handelsbanken.
The Norwegian economy has a strong start next week. Monday morning opens with new GDP figures on how the economy will develop in August.
This is followed by a summary of September’s price rise on Tuesday, as one of the highlights of this week’s economic calendar.
“We think this week’s inflation numbers will point in the direction of another rate hike from Norges Bank,” says Sarah Medgaard, chief economist at Handelsbanken.
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Norway’s high price inflation is the main reason why the central bank has raised interest rates by more than four percentage points in just two years. At the end of September, the Bank of Norway raised the interest rate to 4.25 percent, and at the same time announced that the interest rate would likely rise to 4.5 percent in December.
So there would have to be big negative surprises in the inflation numbers for this rise in interest rates to lead to nothing, says Medtgaard.
– People have become more cautious
Price inflation is expected to fall further in September. Economists believe the overall inflation rate will reach 4% compared to the same month last year, according to estimates obtained by Bloomberg. The growth rate reached 4.8 percent year-on-year in August.
Inflation peaked in September last year, at seven and a half percent, while it is now about four percent. This is particularly due to lower electricity prices, says Kjersti Hoogland, chief economist at DNB Markets.
Core inflation, which ignores energy prices and tax changes, is expected to fall to 6.1 percent compared to the previous year. Norges Bank pays great attention to this when it sets the interest rate. The central bank’s goal is to stabilize inflation at around two percent.
Economists, including Hoagland and Midtgard, expect the inflation figures to be roughly in line with Norges Bank estimates.
We are seeing that rising interest rates are starting to affect people’s finances, and I think we will be able to see that in the numbers that will arrive on Monday morning. Hoagland concludes that people are becoming more cautious.
The Nobel Prize, the Fed report, and more inflation
Internationally, inflation and interest rate figures also appear to be the biggest events on the calendar.
The week begins with a very different annual event, when the Nobel Prize in Economics is awarded on Monday. Last year, among other things, former US central bank chief Ben Bernanke won the award for his research into banking and financial crises.
In the United States, the results of September’s price rise will be published on Thursday afternoon, which markets around the world are closely following. Economists expect inflation to decline slightly to 3.6 percent. Core inflation is also expected to fall slightly to 4.1 percent, according to estimates compiled by Bloomberg.
Last night, we got a closer look at what the US central bank is thinking, when the minutes of its previous interest rate meeting are published. At its September meeting, the Federal Reserve kept interest rates unchanged.
Other countries include Sweden, Denmark and China releasing inflation figures throughout the week, while final inflation figures will be released for several important European economies.
Results season is in full swing
At the end of the week, we get the first taste of results season, when companies in this country and on Wall Street begin issuing quarterly reports for the third quarter.
As usual, ABG Sundal Collier is one of the first companies in Oslo Bors. The brokerage will release quarterly results on Friday, the same day that Norwegian cryptocurrency exchange Block Exchange will present its semi-annual report.
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In the United States, banks are usually the first big names to publish numbers. Citigroup, JPMorgan and Wells Fargo report quarterly on Friday. The same goes for BlackRock, the world’s largest asset management company.
Vår Energi, PGS and Kid will also provide updates during the week, before the figures are released later this fall.
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