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Stage Set For a Steeper Path

NORGES BANK
  • Following a firm commitment in both December and January, the Bank are set on lifting the deposit rate by another 25bps to 0.75% at the March meeting. Burgeoning inflationary pressure and a fading COVID headwind should translate to a higher, steeper rate path projection that puts policy above the neutral rate at the end of 2023 – a prospect that’s already baked into market expectations.
  • A new set of economic projections is due, extending the end of the forecast horizon out to the end of 2025. The forecasts are expected to show acute near-term inflationary pressures, with the prospect of a wageprice spiral countering downside risks emanating from the Ukraine crisis and any subsequent economic slowdown. This argues in favour of more aggressive policy over the next 24 months, putting rates projections above 2.00% at end-2023.
  • Full preview here: https://marketnews.com/mni-norges-bank-preview-mar...

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