Norwegian Krone: Norges Bank cautious on hikes – Commerzbank
Antje Praefcke at Commerzbank highlights that Norges Bank kept its policy rate at 4.25% in June but signaled a higher chance of another hike, with the year-end rate forecast just over 4.5%.
In June, Norges Bank maintained its policy rate at 4.25%, but signaled a higher likelihood of another hike, with an end-of-year forecast nearing 4.5%, according to Antje Praefcke of Commerzbank. Mixed July inflation data, along with elevated price pressures, indicates that the central bank may maintain the status quo, with a potential rate move delayed until September.
Consequently, the forecast for the policy rate has been raised slightly since March and stands at just over 4.5% at year-end (previously projected to be between 4.25% and 4.50%). Despite both headline and core inflation remaining above the 2% target and showing no clear downward trend, Commerzbank believes a rate increase during tomorrow's monetary policy meeting is improbable.
Norges Bank will likely wait for further data and, if needed, may raise the policy rate in September, once new forecasts are available. However, the bank will continue to adopt a vigilant, cautious, and hawkish stance, aligning with its June position but without panicking over an interest rate hike.
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