Norway’s underlying inflation rose to 3.4% in May, exceeding forecasts and accelerating expectations for a September rate increase.
The Norwegian Krone strengthened after May’s underlying inflation climbed to 3.4% year-over-year, above the 3.2% consensus and Norges Bank’s 3.3% forecast. Headline CPI matched expectations at 3.1%, down from April’s 3.4%.
Norges Bank surprised markets with a 25 bps hike in May, raising rates to 4.25%, and signaled further tightening due to persistent inflation. Swaps markets now price in a September hike, pulled forward from November.
Elevated energy prices and hawkish policy expectations continue to support the Krone, which remains the top-performing major currency year-to-date.