VIEW: J.P.Morgan Still Don’t Expect A Dec Hike, Although Note Hawkish Risks Post-CPI

J.P.Morgan note that “after a large downside surprise in September, core inflation surprised to the upside in October at 6.0%oya. This was well above our forecast of 5.7%oya, even though this was the highest among all surveyed economists.”

• “On the month, core rose 0.6% (nsa), the highest ever recorded in October.”
• “Headline CPI rebounded 0.7%-pt to 4.0%oya. Correcting for the core inflation upside surprise, this was as expected. CPI is, however, still 0.4%-pt below Norges Bank’s forecast.”
• “Both domestic and imported inflation rebounded and are now close to Norges Bank’s projections.”
• “Details within core showed strong prices for food and furniture, reflecting a weak NOK and reversal of price campaigns. Food prices will likely fall again in November though.”
• “Encouragingly, the pandemic-affected sectors showed a sharp loss of momentum and the category “services where labour dominates” did not rise, again questioning Norges Bank’s view that wages will be a more significant driver going forward.”
• “Until today, inflation and activity data since the September meeting had overwhelmingly supported our out-of-consensus call of no December hike, but the October core CPI clearly questions that call. For now we stick to our forecast as we think core will fall back again in November.”