Krone Surges to One-Month High as Inflation Quickens: Oslo MoverJosiane Kremer
Norway’s krone rose to the highest against the euro in almost a month after inflation in Europe’s second-richest nation per capita accelerated more than estimated, damping interest rate cut speculation.
The currency, which has emerged as a haven from Europe’s debt crisis, gained as much as 0.3 percent versus the euro to trade at 7.5174, the highest level since April 16. The rise added to the biggest three-day gain since August 2012. The currency traded at 7.5243 as of 10:34 a.m. in Oslo, gaining against all major currencies in a basket compiled by Bloomberg.
Norway’s underlying inflation rate rose to the highest level in more than a year, a report showed. Inflation, adjusted for taxes and energy prices, increased to an annual 1.5 percent from 0.9 percent in March, according to Statistics Norway. Prices were estimated to rise 1 percent, according to the median forecast of 13 economists in a Bloomberg survey.
“We had unexpectedly high core inflation in April,” Kari Due-Andresen, an economist at Svenska Handelsbanken AB in Oslo, said by phone. “It clearly weakens the case for an interest rate cut.”
Norges Bank left its main interest rate unchanged at 1.5 percent this week and kept an outlook for rates to rise in about a year from now. Policy makers said they refrained from cutting rates again, in part as the krone had weakened 3.9 percent since hitting a record in February on an import-weighted basis.
“What made them not cut the interest rate among other things at the May meeting was the weak krone,” Due-Andresen said. “Some of that will be reversed now, so we will have to see how that develops.”
Krone strength has helped keep inflation below the bank’s 2.5 percent target since 2009. Policy makers will meet on June 20 to decide on interest rates.
The headline inflation rate in April was 1.9 percent in the year and consumer prices rose 0.6 percent in the month.