Today, all eyes are on the latest inflation figures for August as we await next week’s Norges Bank meeting. Commerzbank’s FX analyst Antje Praefcke believes that despite some concerns, Norges Bank is unlikely to bring forward the first rate cuts.
According to Praefcke, the core inflation rate remains high, with July’s headline rate at 2.8% and the core rate at 3.3%, well above the target of 2%. This trend is expected to continue in August.
While Norges Bank acknowledged a slowdown in inflation at its August meeting, the current inflation levels are still above target. Factors such as the depreciation of the krone pose inflation risks, but Norges Bank is unable to fully explain this phenomenon.
There is speculation in the market that Norges Bank may lower the policy rate before the end of the year, especially if today’s inflation figures disappoint. However, it is important to exercise caution as long as the NOK remains weak and under downward pressure, as this could delay any rate cuts by Norges Bank.
Overall, investors should closely monitor the upcoming Norges Bank meeting and the inflation figures to gauge the potential impact on their investments. Stay informed and be prepared for any changes in the financial market.