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Bank Boosts Policy Rate by 50bps, Inline with MNI Expectations

  • Norges Bank hikes rates by 50bps to 3.75%, alongside MNI expectations, and flags that the key rate will likely be raised further in August.
  • Full Norges Bank statement here:
  • New rate path shows higher peak rate, up to 4.21% in Q4'23 and Q1'24, with end-horizon rate boosted to 2.88% from 2.54% in March. That's a 61bps upgrade for the peak rate from the March report.
  • Immediate strength noted in the NOK, driving EUR/NOK to new daily lows and putting the cross at 11.5538. FRAs also correcting higher to incorporate the tighter rate path profile - the bank adding ~50bps of further tightening across the forecast horizon. Timing of the rate peak itself is broadly unchanged, but suggests rates will be kept higher for longer. Full rate path inc. Basis point changes here:

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