Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Executive Summary:
- Bank expected to raise rates by 25bps, inline with the guidance handed down in January
- Fresh path projections likely to point to higher peak rate in Q3
- Global banking turmoil should curtail impulse to hike 50bps, despite high CPI
Meeting their forward guidance made in January, the Norges Bank are likely to undergo another single hike in March, lifting the deposit rate to 3.00%. It’s likely that absent March’s global banking turmoil, the Bank would have more seriously considered a double hike of 50bps after Q1’s hotter-than-expected inflation, but uncertainty surrounding the state of financial stability should curtail this impulse for now. Nonetheless, the bank cannot yet eliminate the need for further tightening this cycle.
Figure 1: Q1 inflation topped the Bank’s Dec forecast
Pressure has been building on the bank since the January inflation release, which saw the committee’s favoured inflation measure, underlying CPI-ATE, convincingly top forecast. While the hot January release was followed by a reversion lower in February, Q1 inflation still underlines the need for tighter policy at this juncture. A 25bps hike would be consistent with the bank’s return to the gradualist approach to rate-setting outlined last year, and any guidance that rates could rise further going forward will see the June and September policy meetings come into focus.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.