VIEW: Svenska HB: Clear Risk Of Another 50bp Hike In September

In lieu of today’s Norges Bank monetary policy decision Svenska Handelsbanken note that “in terms of the balance of risks, the Committee is concerned that little spare capacity and persistent global price pressures will accelerate inflation even further. But higher interest rates and inflation may also have a cooling effect on both the housing market and consumption. Norges Bank also addresses the risk of a sharper slowdown in global growth, and point to the fact that international interest rate expectations have been lowered.”

• “Norges Bank is yet again front-loading its planned rate hikes. And, as stated initially, we see a clear risk of another double rate hike at the following meeting in September. But due to weaker global growth prospects and lowered international rate expectations, not least some concerning signals regarding the Norwegian household sector, we still believe that the terminal rate will be lower than currently signalled by Norges Bank. We maintain our view that the key policy rate will peak at 2.75%, whereas Norges Bank has signalled a peak next summer of 3.00-3.25%.”