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MNI BRIEF: Norges Bank Hikes 50bps, Sees Next Hike In Aug

(MNI) London
(MNI) London

The Norges Bank hiked its key Policy Rate 50 basis points at its June meeting to 3.75% and it raised its rate projections to show a rate peak at 4.25% in the Autumn compared to a previous peak of 3.6% in the fourth quarter. (MNI NORGES WATCH: Data Seal June Hike Of At Least 25BP)

The committee said that it was most likely to hike again at its August meeting, with the fast tightening lifting the policy rate swiftly to its new projected peak. The detailed rate profile showed that policymakers are not expecting to implement a policy of high-for-long policy with the rate starting to come down from mi- 2024 and to drop to 2.88% by the end of the three year forecast horizon.

Inflation has come in markedly above its previous forecasts with higher wage growth and a weaker krone set to prevent any swift decline. The target CPI-ATE measure was projected to peak at 6.58% this quarter and to then fall gently and it was still expected to be just above the 2.0% target, at 2.17%, in three years' time. Governor Ida Wolden Bache said that the rate hike needed to prevent inflation becoming entrenched, she said.

MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
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MNI London Bureau | +44 203-586-2223 | david.robinson@marketnews.com
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