US LNG exports surge but will buyers in China turn up?
Investing.com -- Norges Bank is likely to maintain its policy rate at 4.5% in the upcoming meeting while signaling a potential rate cut in September, according to Capital Economics.
The Norwegian economy has shown resilience, with mainland GDP growing 1.0% quarter-over-quarter in the first quarter of 2024, exceeding Norges Bank’s forecast of 0.6%. Firms’ output expectations suggest mainland GDP will rise by approximately 2% year-over-year in coming quarters, and a central bank survey indicated few Norwegian companies expect higher U.S. tariffs to reduce their exports.
Core inflation fell to 2.8% in May, below the central bank’s 3.1% forecast, and may decline further in coming months. The Norwegian krone remains broadly in line with Norges Bank’s projections, limiting the impact of exchange rate movements on the inflation outlook.
Domestic price pressures remain significant with services inflation exceeding 3% and domestically-produced goods inflation above 5%. The labor market continues to be tight with healthy demand and strong wage growth, with firms’ and social partners’ wage growth expectations increasing in the second quarter.
Capital Economics expects Norges Bank to maintain a cautious approach, keeping rates unchanged next week while signaling monetary policy loosening in the third quarter, likely in September, with gradual rate cuts in the second half of the year that would leave the policy rate "high by European standards."
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