- • 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.
