MNI BRIEF: Norges Hikes, Raises Rate Projection To 3.6% Peak
Norges Bank delivered a 25bps hike to 3.0% and raised its rate projection to show another two 25bps hikes are likely
Norges Bank delivered its well-trailed 25 basis point rate hike at its March meeting, lifting the policy rate from 2.75% to 3.0% and it raised its rate projection, signalling at least two more 25 basis point hikes with the rate peaking at 3.6%. (MNI NORGES WATCH: March Hike, Possibly Higher Rate Path)
The Monetary Policy and Financial Stability Committee stated that the next rate hike would come at its May meeting if things unfolded as expected, with the rate then climbing to a 3.6% peak before declining in the latter half of 2024 to 2.54% three years out. That profile was markedly higher than its previous quarterly forecast, which showed the policy rate peaking at 3.11% before falling back below 3.0% in 2024 and dropping to 2.38% three years ahead.
The policy assessment cited currency weakness and a tight labour market as factors behind the hike, stating that "Higher wage growth and a weaker krone than projected earlier push up inflation ahead," with the projected hikes designed to eventually bring inflation back close to the 2.0% target.