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MNI Norges Bank Preview - June 2023: Concurrent Factors to Tip Balance to 50

Executive Summary:

  • Accelerating core inflation should tilt decision to ‘double’ hike of 50bps
  • Fresh path projections should see possibility of key rate above 4.00% next year
  • Weak NOK, higher foreign rates, tight jobs market argue for faster policy tightening
Full preview including summary of sell-side views here:


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.

Both markets and analysts are split ahead of this week’s decision, with a significant minority looking for a larger 50bps move, while the slim majority look for the bank to keep pace with a 25bps rate rise. NOK FRAs see partial probability of a larger move, with 30-35bps priced for this week.
MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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