No rate change expected in Norway – DNB Markets

DNB Markets says it does not expect an interest rate change in Norway when that country’s central bank announces its latest rates decision on Thursday this week.

Recent macro data point to a slowdown in non-oil sector related parts of the economy, with domestically focused manufacturers expected to post the lowest growth rates over the next six months.

Investment levels over the next 12 months are expected to remain “moderate”, with municipalities, hospitals and manufacturing seeking to invest more, but retail trade and services investing less. The country’s key oil and gas sector is estimated to grow its investments 6.8% from 2012 to 2013, but DNB said the central bank’s own estimate of 9% in volume terms “now seems slightly too high.”

One key reason the bank is not expected to announce any changes is the steady pace of wage growth. “Employment growth has moderated during the last three months, and is expected to stay at the same level for the next three months,” DNB said.

“Wage growth is expected to be 4% this year, the same estimate as in the previous survey. Price growth has been moderate for the past 12 months, and is expected to remain moderate in the next 12 months.”

Core inflation as measured by CPI-ATE was running at an annualised rate of 1.1% in February, with the inflation target of 2.5% still “out of sight.”


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