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Concurrent Factors Should Tip Board to 50bps Hike in June

NORGES BANK
  • The Norges Bank's model-based policy approach and sensitivity to the weaker local currency should tilt the Bank to conducting a 'double' hike of 50bps this week. Core inflation is re-accelerating, wage settlements remain elevated and a tight labour market suggests continued pressures ahead. Lastly, the resilient housing market justifies a faster pace of tightening in Norway.

  • Most of these factors would justify a 25bps step for June, however the May CPI-ATE release will have changed the thinking of the board, and should result in sharply higher near-term inflation and rate path projections, as well as a lower assumption for the I-44 NOK exchange rate.
  • Full MNI Preview including summary of sell-side views here: https://roar-assets-auto.rbl.ms/files/54229/MNINBP...

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