SEK/NOK: Some room for a rebound before entering a structural downtrend until late this year – ING

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Focus turns to Scandinavia. Economists at ING analyze SEK/NOK outlook after Norway released inflation data. In Sweden, the December Consumer Price Index (CPI) will be published next week.

Norwegian underlying inflation declines further

Norway released CPI figures for December, showing headline inflation remained unchanged at 4.8% while underlying inflation declined from 5.8% to 5.5%. We expect further progress on disinflation and a deterioration in global conditions to lead to rate cuts by Norges Bank as early as 2Q, broadly in line with market expectations.

In Sweden, December CPI numbers are released next week: expect some action in the Krona.

We currently see some room for a rebound in SEK/NOK before the pair enters a structural downtrend that we see lasting until late this year.