VIEW: DNB Maintain Call For 50bp Hike In September

DNB note that “Norges Bank’s Monetary Policy and Financial Stability Committee guided in June for a 25bp hike at the August meeting. In today’s assessment Norges Bank points to the strong inflation figures as the main reason for taking a larger step than guided for. Norges Bank also stated that “a markedly higher policy rate is needed to ease the pressures in the Norwegian economy and to bring inflation down towards the target”. It also said that a “… faster rate rise now will reduce the risk of inflation becoming entrenched at a high level and the need for a sharper tightening of monetary policy further out.” After today’s hike the rate is at a neutral level, in Norges Bank’s view. The statements above indicate there is a need to bring the rate up to a tightening stance. We thus maintain our forecast of another 50bp hike in September.”