In Sweden, the week ahead provides some long-awaited data on inflation (due Tuesday at 09:30 CET). Given the recent weakening of the SEK and a rise in oil prices, we expect a pronounced uptick in the overall CPI inflation numbers but more subdued developments in 'core' measures such as CPIF excluding energy.
Our estimates for November CPIF and CPIF excluding energy are 1.56% y/y and 1.21% y/y, respectively. This is 0.15pp and 0.17pp, respectively, below the Riksbank's corresponding estimates and implies that the difference compared with October remains.
In Norway, Norges Bank is due to hold its rate-setting meeting and publish its new monetary policy report on Thursday. Although the September report indicated a roughly 40% chance of a further rate cut by June next year, the executive board was much clearer in its communication, taking pains to signal that interest rates have hit bottom - a message that was repeated at the meeting in October.
Our analysis indicates, on balance, that we are looking at a 10-15bp downward revision of the interest rate path for next year. In isolation, this would mean the new path showing an almost 100% chance of a further rate cut.
However, the reason we do not expect Norges Bank to go that far but to continue signalling that interest rates have probably hit bottom is that the housing market seems to have been even stronger than expected. The long-term costs of lowering interest rates further have risen and there is also less need for a cut now that growth is picking up and interest rates seem to have bottomed elsewhere in the world.
In Denmark, the statistical office is due to release inflation figures for November on Monday. We believe the base effects of the fall in food prices has pushed up the rate of inflation, which has been hit hard by falling prices for mobile telephony and clothing. We estimate prices climbed by 0.0% m/m and 0.5% y/y.
To read the entire report Please click on the pdf File Below