Norges Bank: Last hawk standing? - ING

Jonas Goltermann, developed market economist at ING, points out that the Norwegian central bank raised interest rates to 1% today as per expectations.

Key Quotes

“The near term outlook for further rate hikes was also revised upwards, with the central bank now suggesting it could hike two more times this year, with another hike already in June now possible to contain stronger than expected price pressure in the Norwegian economy.”

“But further out, the Norges Bank forecast has become considerably more cautious. The rate path in 2020 and 2021 was revised downward and now tops out at 1.75%, with the last rate hike likely to come around mid-2020. In effect, the central bank is signalling the end of the current rate hiking cycle by the middle of next year.”

“Today’s policy decision reinforces our view that Norway's central bank remains a hawkish outlier among G10 central banks. Both the Fed and the ECB are now signalling no further hikes in 2019. None of the other G10 central banks are likely to hike more than once this year and are highly unlikely to match the NB’s planned pace of three hikes by mid-2020.”