– May provide temporary relief – E24

Next week we'll get an answer to how US price inflation will develop in May – and we'll get Norwegian unemployment numbers.

– US inflation numbers are undoubtedly the most important thing this week. They could give the market a temporary respite, because there is now an expectation that monthly growth will fall further, chief economist Sarah Medgaard at Handelsbanken tells E24.

After rising somewhat suddenly at the beginning of the year, price inflation has eased in recent months. In the past two months, price inflation fell by 0.2 percent respectively and then by another 0.1 percent.

And on Friday, we'll get new answers about how the battle against inflation is going in the US, when the so-called May PCE inflation, the central bank's preferred inflation calculation, is presented.

– It is the monthly growth that the market and, not least, the Fed have been interested in this year, given the unfortunate development in the first few months. It declined slightly in April, and is expected to continue developing in May. Medgaard says that could give the market more wind on Friday, which would lead to lower annual growth.

Core inflation was 2.8 percent last month, still somewhat above the central bank's target of sustainable core inflation of around 2 percent.

Analysts expect core inflation for May to remain unchanged at 2.8%, according to estimates obtained by Bloomberg.

We believe in two interest rate cuts

The previous US interest rate meeting was held on June 12, and the Fed, as expected, chose to keep its key interest rate unchanged at a range of 5.25 to 5.50 percent, the same level it has been at since July. From last year. .

The average forecast by members of the Federal Reserve's interest rate committee is that there will be only one rate cut this year, but the market is still counting on two cuts.

– The market is now calculating the possibility of two interest rate cuts in the US this year and sees the first rate cut in September. If the numbers come out as expected or weaker than expected, it will likely increase market belief that interest rates will be cut twice this year. But the market is volatile, Medtgaard says.

Annual growth, that is, the development compared to the corresponding months of the previous year, may remain high during the summer, due to so-called base effects. This is because monthly growth about a year ago was weak.

Although core inflation is expected to decline in May, it may be a short-lived bliss as core effects could lead to a surge in annual growth over the summer holidays, says Medgaard.

-More optimism

On Friday this week, Nav also publishes its key labor market figures, where we get answers on, among other things, what unemployment looks like.

Handelsbanken expects unemployment to remain unchanged at around 2% in June, according to Norwegian Bank forecasts.

-We see somewhat more optimism in the Norwegian economy, and both companies in Norges Bank's regional network and the outlook survey are more optimistic regarding employment plans. “We believe registered unemployment will remain low,” says Medgaard.

– It says it will be neutral regarding interest rates.

It notes that Norges Bank expects the unemployment rate to rise only slightly in September, but will remain low in the coming months.