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Upward Revision to Rate Path Becoming Increasingly Necessary

NORGES BANK
  • EUR/NOK has now shown below key support at the 50-dma of 11.6621 - breaking the key support level for the first time since Q4 last year - and could represent a key momentum shift for the cross.
  • DNB may be the first, but unlikely to be the last sell-side analyst to update their Norges Bank view ahead of the June decision - this morning's CPI-ATE release was against all local and foreign analyst expectations, although a select few analysts noted the upside risk to food prices after the conclusion of the supermarket price war in April.
  • NOK FRAs have rallied to price in tighter Norges Bank policy before year-end, with Jun/Sep-23 FRA rallying to a contract high of 4.16 points and Sep/Dec-23 FRA adding ~12bps to print 4.53 points after this morning's data release.
  • The move in market rates will likely be reflected in June's fresh path projections, with an upside revision becoming increasingly necessary given the committee's model-driven approach to policy.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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