Norway rate cut bets ease as jobless rate falls

Earlier data which revealed a decline in NORWAY'S adjusted unemployment rate has seen odds for a November rate cut from the NORGES BANK fall to 50% from 65% on Monday, with many now believing the first cut won't come until well into next year.

The seasonally adjusted registered jobless rate for August fell to 2% from the previous month’s 2.1% and was in line with Norges Bank’s projection from June.

The decline adds to factors such as the weak krone that favor Norges Bank’s current aggressive stance of keeping its benchmark rate at 4.5%.

Svenska Handelsbanken note that the "previous month’s negative surprise - a sharper-than-expected rise in the unemployment rate - appears to have been just a temporary ‘scare’."

"In this context, the latest figures for August should be reassuring for Norges Bank, as they continue to support the strategy of maintaining the current policy rate for some time ahead. We still expect the initial rate cut to occur in March next year."

Danske Bank agree that the report "no doubt reduces the likelihood of a rate cut from Norges Bank this year," while pointing out it is the last labor-market report before the policymakers’ meeting next month.

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