###POV: RATE HIKE NAILED ON, POLICY.....>

NORGES BANK: ###POV: RATE HIKE NAILED ON, POLICY PATH KEY

-A 25bps hike has been telegraphed by the Norges Bank for months, and all

analysts surveyed expect Norwegian deposit rates to rise to 1.00% at the March

meeting. Domestic GDP growth has beaten the bank's internal forecasts and

inflation dynamics remain encouraging. The Bank's 2019 policy path will likely

remain unchanged, with the strong economy at home countered by weaker

developments in key trade partners. This should be reflected in a path that

suggests one more 25bps hike this year. However, medium-term global risks to

economic stability and commodity markets could see the 2020 path trimmed to

accommodate for this.

-Dovish risk: Any flattening of the 2019 policy path would prove a dovish

surprise and the suggestion that there are to be no further rate hikes before

December will likely result in NOK weakness and re-targeting of the 100-dma.

-Hawkish risk: Bank allow policy path to drift higher and incorporate higher

rates at end-2020, ignoring the contrast with the easier ECB stance. NOK bulls

may then press EUR/NOK below the 200-dma for the first time since November.