MNI BRIEF: Norges Bank Hikes 50 bps; May Slow To 25bps Hikes

Norges Bank delivered an as expected 50 basis point hike, lifting the policy rate to 2.25% Thursday, publishing a rate profile suggesting that the benchmark rate should peak just over 3% before dipping. The Monetary Policy and Financial Stability Committee said the policy rate was most likely to be raised again in November, with its detailed rate profile suggesting that after this latest 50bps hike, it may move in 25bps steps.

The policy rate was projected to peak at 3.11% in 2023 and to hold close to 3% in 2024 before dipping to 2.56% at the end of the three year forecast.

The near-term inflation forecast was raised sharply. On the target CPI-ATE measure was shown up 4.8% in 2023 on the previous year, 1.5 percentage point higher than previously forecast, and then staying above target to end the three year period at 2.6%, which was revised down 0.2 percentage point. The near-term growth forecast was cut sharply to 0.8 in 2023, down 0.8 percentage point from June.