Most Sell-Side Still See 25bps as Most Likely August Step

Sell-side views:

• Handelsbanken forecast CPI-ATE slowing to 6.5% and – if correct – should prompt the NB to stick to a 25bps rate hike in August. At present, they see a roughly 50:50 split between the likelihood of a hike of 25bp or 50bp.
• SEB write that CPI-ATE should decline markedly due to strong base effects, but food prices are expected to continue to rise fast. Nonetheless, there are some signs that core inflation is near a peak.
• Swedbank forecast a pullback to 6.5%, and lean toward a 25bps hike for August. They caution that CPI-ATE above 6.7% would prompt another 50bps rate hike this month.
• Nomura see both headline and core inflation slowing due to base effects, although inflation momentum should remain a concern for the Norges Bank. They forecast CPI-ATE at 6.3% and expect a large fall in electricity prices, albeit countered by petrol and diesel prices.