Norway CPI and the Norges Financial Stability Report

In Norway, the Norges Bank kept policy unchanged last week, in line with the market expectations. Governor Olsen noted that the Norges would be re-assessing its forecasts at the December policy meeting after observing growth data for Q3. An additional 25bp rate cut is expected in the next three to six months should the growth outlook continue to deteriorate as the Bank currently projects. The Norges Bank re-iterated its concern about increasing unemployment, whilst Norway's labour market remains immobile, suggesting increasing slack and a wider output gap, a key issue for Norges policy.

Inflation (Tuesday) and the release of the Norges Bank's Financial Stability Report (Thursday) will be the focus this week. CPI-ATE is expected to increase by 3.0% y/y (consensus: 3.1% y/y) but continue to argue that growth indicators are likely to be more important for Norges policy and the NOK. Indeed, data recently have surprised expectations to the upside helping fuelling some unwind of NOK weakness.