DNB Carnegie tror ikke lenger på renteheving i september

The Statistisk sentralbyrå (SSB) released new inflation figures on Thursday morning. While it remains uncertain whether inflation expectations have weakened significantly, senior economist Oddmund Berg from DNB Carnegie believes that the recent downward trend, combined with weaker real economic indicators, will likely keep the central bank's policy rate unchanged in September.

The latest data showed general inflation at 3% in August, with core inflation at 3.3%. Berg noted that developments in component indicators were consistent with DNB Carnegie's expectations. The new figures only contained few surprises, but they emphasize a real likelihood that inflation will continue to improve in the coming months.

However, Berg also points out that many important inflation drivers remain unchanged, meaning there is still a risk that core inflation could remain close to 3% by the end of the year. Consequently, DNB concludes that the central bank is likely to keep the policy rate steady at its September meeting, but the bank also expresses an increased probability of a rate hike in December.

"The recent improvement in core inflation, combined with weaker real economic indicators, provides a strong argument for waiting for more information about the path of growth and inflation," Berg wrote. Next week, Norges Bank will publish its quarterly review of the Regional Network, which provides a snapshot of the Norwegian economy.

The report is a crucial part of the central bank's decision-making process before the next interest rate meeting. Berg noted that signals from the report could still change DNB's conclusion that the central bank is likely to keep the rate unchanged, but such a shift would likely require a "surprisingly strong turn" compared to recent trends, which DNB now considers "less likely."