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MNI Norges Bank Review - June 2023: Higher for Longer

Executive Summary:

  • Raised rates by 50bps to 3.75%, re-accelerating the tightening cycle
  • Bank boosted the peak rate by over 60bps, foresees holding at higher levels for longer
  • Currency again a focus, but NOK seen strengthening from here on out
Full MNI Review including summary of sell-side views here:


A quicker pace of tightening, sharply higher policy path projections and stronger assumptions for wages drove a hawkish market response to the Norges Bank rate decision, and the bank went further – stressing that their job on inflation is not yet complete, with additional rate hikes required by the end of the Summer. This makes 2 further 25bps rate hikes highly likely, leaving the bank to communicate the next steps for policy at the September Monetary Policy report – at which the deposit rate will sit at 4.25%.

The bank hiked policy rates by 50bps to 3.75%, boosted rate path projections and flagged the August meeting as the next most likely rate hike. The board’s new rate path showed a higher peak rate, up to 4.21% in Q4'23 and Q1'24 (from 3.60% in March’s report), with the end-horizon rate boosted to 2.88% from 2.54%. The higher revision marked a 61bps upgrade for the peak rate from the March report – among the sharpest upward revisions for the very front-end of the curve since the beginning of the tightening cycle last year.
MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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