Nordea hunts down a Norwegian interest rate typo

Posted by Tracy Allowayon Jun 29 09:09.

Price action in the Norwegian krone on Tuesday:

Last week Norway’s central bank said it was holding interest rates at 2.25 per cent, but indicated through various data sheets and background material that an interest rate rise could come in either August or September. August had an overwhelming 68 per cent chance, and September 32 per cent.

Small problem — apparently that was a mistake.

On Tuesday, SEB fixed income strategist Erica Blomgren pointed out that Norges Bank had changed its interest rate path to signal a 100 per cent probability for an August hike. But they appear to have done so without a press release indicating the change. It wasn’t until Nordea analysts highlighted the alteration to the data series early on Tuesday, that the market became aware of the switch.

The central bank eventually confirmed to Reuters:

OSLO, June 28 (Reuters) – Norway’s central bank said on Tuesday it had corrected its interest rate path projection, making an August rate hike more likely than indicated after its rate-setting meeting last week and angering some economists.

There was a typo in the original spreadsheet, which we then corrected,” Norges Bank spokesman Oeystein Sjoelie told Reuters.

Whoops!

Now the analysts at Nordea reckon the mistake was more than just a single typo, there were other (presumably embarrassing) errors in the data. That might help explain why the central bank tried to quickly and quietly correct the information. According to Reuters, the change was actually made just two hours after Norges Bank’s rate decision announcement last Wednesday… So market-sensitive information was sitting on the central bank’s website for a full five days or so, without anyone noticing.

And they would’ve gotten away with it too…

… if it weren’t for those pesky Nordea analysts.

Related link:
Goldman makes an expensive typo – FT Alphaville

This entry was posted by Tracy Alloway on Wednesday, June 29th, 2011 at 9:09 and is filed under Capital markets. Tagged with , , , .

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