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What a Short, Strange Trip It's Been


Pfizer, Moderna Jabs Retain High Trust; AZ, Sputnik Lower

By David Robinson
     LONDON (MNI) - The Norges Bank's Executive Board left its key policy rate
unchanged at 0.5% at its May meeting, with an Autumn rate hike still on the
     In the accompanying statement, Governor Oystein Olsen said there has been
no substantial change in the outlook since the central bank completed its last
full forecast round in March.
     The May meeting was an interim one, with no new rate forecast published by
the central bank. The lack of material change from March entails that the
central bank is still steering towards a rate hike after the summer.
     "The outlook and the balance of risks do not appear to have changed
substantially since the March Report. This suggests keeping the key policy rate
unchanged at this meeting", Olsen said.
     The Norges Bank's in-house forecast in the March report showed the policy
rate rising to 0.76% by the end of 2018, fully factoring in a 25 basis point
rate hike. The probabilities attached to the rate outlook showed a 90% chance
that the rate would be within a -1.11% to 2.64% range, with a hike more likely
than not in the autumn.
     Back in March, Olsen said the balance of risks suggested "that the key
policy rate will most likely be raised after summer 2018."
     Inflation since the March report has undershot the central bank's own
forecast and target but its view is that as the economic slack disappears
inflation pressures will mount.
     In the March Monetary Policy Report Norges Bank said that the output gap
was closing and rising capacity utilisation would push up on prices and wages
down the road, making a post summer interest rate hike the most likely outcome.
     In the May 2 meeting the Executive Board assessed the new information
against the March report.
     It said that "growth among Norway's trading partners so far in 2018 has
been slightly weaker than projected in March" but global inflation had picked
     Overall the board said that there was little new information about the
Norwegian economy. Goods consumption in the first quarter was lower than
expected, house prices had stabilised and oil prices had come in higher than
     The headline inflation measure, CPI-ATE, which excludes energy prices, was
just 1.2% in March.
     The picture of the Norwegian labour market was pretty much unchanged, with
the registered unemployment rate flat at 2.4% and at 3.9% on the international
standard Labour Force Survey measure. 
     "The Executive Board's assessment is that the upturn in the Norwegian
economy appears to be continuing broadly in line with the picture presented in
the March Report. Underlying inflation is below the inflation target, but the
driving forces indicate that it will rise," the board's assessment stated.
--MNI London Bureau; tel: +44 203-586-2223; email:
--MNI London Bureau; tel: +44 203-586-2225; email:
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