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More Hawkish Than Expected, 50bps Plus Flagged August Hike

NORGES BANK
  • A more hawkish than expected rate decision - a larger hike than forecast (50bps vs 25bps) and also flagged a further 25bps hike in August.
  • The rate path is steeper, but could suggest that today's 50bps hike is a one-and-done and the bank will return to 25bps increments going forward. Rates now seen as 'restrictive' I.e. North of 1.7% ahead of year-end, as expected.
  • Peak of the tightening cycle is seen earlier in Q4'23 (projection at 3.10%) vs. March's assessment of 2.52% in Q3'24.
  • EUR/NOK corrects lower on release, touching 10.4392 before stabilising. Focus turns to the press conference with Ida Wolden Bache in 25 minutes.

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