Norway's depressing economic outlook keeps Norges bank in rate cut mood

Norway's August inflation data did not make Norges Bank's decision for or against a further rate cut in two weeks' time any easier. Even though the rate of inflation in August of +2.0% yoy was below Norges Bank's inflation target of 2.5% the central bank had expected a rate of inflation of 1.6% for August in its June outlook. 

If today's regional network report confirms the continuous decline in company sentiment, which is also reflected in the PMI, Norges Bank might see sufficient economic downward risk to justify another rate cut. 

"Generally speaking the economic outlook in Norway remains depressed as a result of the persistently low oil price. As a result Norges Bank remains in rate cut mood despite the risk of inflation overshooting. The lower end in EUR-NOK remains unattractive ahead of the rate decision", says Commerzbank.