###POV: BANK TO MAKE HAY WHILE THE......>

NORGES BANK: ###POV: BANK TO MAKE HAY WHILE THE SUN SHINES

-The bank are unequivocally seen raising interest rates by 25bps to 1.25%

Thursday. With solid economic performance at home, implicit endorsement from

currency markets and underlying inflationary pressure the bank should be able to

live up to its path projections as outlined in March. Norges Bank are seen

steepening the short-end of the rate path to incorporate a greater likelihood of

a rate hike by end-2019, but shifting the 2020 path flatter, to accommodate

external risks to oil markets, global trade and lower global interest rates.

-Hawkish risk: With the rate hike as good as nailed on, hawkish elements could

surface in the bank's judgement of the terminal rate. In March, this was gauged

at 1.73%. An uptick from there would be judged as hawkish and could lead to NOK

strength.

-Dovish risk: A flatter or unchanged rate path projection for the rest of 2019

poses downside risks for NOK. The Bank saw a 50% chance of a further 25bps hike

by October (beyond an expected hike Thursday) and the market will read a lower

or unchanged probability of hikes by year-end as dovish.