MNI BRIEF: Norges Hikes 25bp, Next Move Likely In September

Norges Bank hiked 25 basis points to 4.0% at its August meeting with Governor Ida Wolden Bache stating that if the economy evolved as expected the next hike would come in September.

The 25bp hike was widely expected although analysts were divided over if and when the Norwegian central bank would hike next. The August meeting was not accompanied by any fresh forecasts with the Bank stating that developments since its June forecast round had been broadly as expected, with inflation edging down and underlying inflation proving resilient. (See MNI NORGES WATCH: Inflation Dip Points To 25bp Hike)

The guidance left the question hanging as to where the peak in rates is likely to come, with a new rate path to be published next month.

"The Committee assesses that a somewhat higher policy rate is needed to bring inflation back to target," Norges Bank stated.

The krone has appreciated more than previously expected -- a factor which will feed into peak rate deliberations.

"If the krone proves to be weaker than previously projected or pressures in the economy persist, a higher policy rate than signalled in June may be needed to bring down inflation," Norges Bank stated in its policy assessment.