Norges Bank unlikely to increase bottom in rate path with current low inflation – Nordea Bank

The Norwegian central bank, Norges Bank has published its second quarter regional network report. The network was on the solid side to the central bank. The main indicator, the current situation, was 1.1, indicating a quarter growth at 0.55 percent quarter-on-quarter. This is close to the central bank’s second quarter forecast at 0.5 percent quarter-on-quarter. The forward looking indicator was showing growth at 0.65 percent quarter-on-quarter over the coming quarters. This is slightly on the upside to the central bank’s forecast.

Both the indicator for capacity issues among the companies and the indicator for labor market pressure rose very sharply in the second quarter. Norges Bank’s projection suggests slightly higher capacity utilization, but far from as much as the survey indicates, noted Nordea Bank.

Growth is accelerating in almost all sectors and affirms the overall scenario. Growth is solid and expanding outside oil-related sectors while the drag from oil-related sectors is diminishing.

The Norwegian economic growth is accelerating and is slightly more than expected by Norges Bank. Moreover, capacity utilization is accelerating at a more rapid rate than anticipated by Norges Bank.

“We do not believe Norges Bank will increase the bottom in the rate path with the current low inflation”, added Nordea Bank.