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MNI Norges Bank Review - June 2022: Urgency Evident in Frontloading

Executive Summary:

  • Norges Bank took markets by surprise and lifted rates by 50bps
  • Path projections prompt sell-side to sharply revise rate expectations
  • Governor makes clear in MNI interview that 50bps rate rises not the new normal
Full piece with summary of sell-side analyst views here:

MNINBRevJun22.pdf

The Norges Bank took markets by surprise in June, by both raising rates by a more sizeable margin and by accelerating the pace of hikes as policy marches toward neutral. The 50bps hike was against median market consensus, but all analysts recognised a real risk of such a hike in the face of accelerating inflationary pressures and higher rates overseas.

Despite the rate rise of 50bps, the board stressed that tightening of such size would not become a new normal – and future hike increments would return to 25bps steps. This was clear in not only the rate path projections (which point to a further 4 25bps rate hikes this year), but also in an exclusive MNI interview with Governor Ida Wolden Bache following the rate decision.

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