Norwegian inflation in July was exactly in line with Norges Bank’s expectations. Economists at Commerzbank expect the Krone to receive support if upcoming data comes strong.

Norwegian inflation "on track"

The overall rate eased more significantly than expected from 6.4% to 5.4%. But Norges Bank keeps a particular eye on underlying inflation, adjusted by taxes and excluding energy prices (the so-called CPI-ATE). With a fall from 7% to 6.4% this rate was exactly in line with market expectations and Norges Bank’s projections. That means, the data did not provide any reason to doubt Norges Bank’s projections and rate path. 

Even though the market continues to expect only one further rate step in the autumn rather than the two Norges Bank signalled in its rate path in June, if the upcoming price data were to surprise on the upside with economic data signalling that the Norwegian economy is resilient the market is likely to take Norges Bank’s view at some point. That in turn would support NOK