Flash Comment

Norway: Strategic NOK update ahead of CPI numbers on Friday Buy DEC08 3M FRA outright

Wed, May 7 2008, 12:54 GMT
by Arne Lohmann Rasmussen

Danske Bank A/S


  • • This week's main event in the Norwegian market will be the CPI numbers on Friday.

  • • We expect a core reading of 2.3% y/y for the core measure in April, up from 2.1% in March. If we are right it will be the second month in a row that the inflation forecast in the Monetary Policy Report from March has undershot actual inflation. Norges Bank only expects a reading of 2.2% in April.

  • • Going forward, we expect core inflation to tick even higher. We expect the core measure to hit at least 2.5% in June well above the current inflation forecast of Norges Bank.

  • • We recommend buying NOK FRA DEC08 3M outright ahead of the release. We expect the market to buy into our long-held story that Norges Bank will not cut rates for at least the next 12 months and that a rate hike in Q3 is a real opportunity.

Published on  Wed, May 7 2008, 14:23 GMT

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