Norway inflation misses forecasts, falls to 4-year low in February

Data released by Statistics Norway showed Friday that Norway's inflation fell to a 4-year low in February adding pressure on the central bank to maintain an easing bias. Norway’s annual inflation rate unexpectedly slipped in February to 1.6 percent year-on-year from 2.1 percent in January, widely missing forecasts for 2.0 percent.

Norway's central bank in December predicted that February inflation would stand at 2.6 percent, just above its medium-term target of 2.5 percent. The Norges bank is set to announce its next interest rate decision on March 16 and the wide inflation miss suggests the Norges Bank will probably maintain its easing bias and refrain from lifting its forward rate guidance.

Statistics Norway released its Economic trends for Norway on Thursday. Statistics Norway forecasts 1.8 percent growth for Mainland-GDP this year, up for 1.7 per cent expected in December. Norges Bank has maintained the highest key interest rate than any major European central bank, but has warned that a sustained downturn in the inflation outlook could prompt it to cut rates.

"We had anticipated an upwards revision to the rate path next week, but we're doubting that now. I believe they'll keep the path where it is," said Nordea Markets economist Erik Bruce.