Norges Bank Preview: Forecasts from five major banks, split between a 25 bps and a 50 bps rate hike

Norges Bank meets on Thursday, June 23 at 08:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of five major banks regarding the upcoming central bank's Interest Rate Decision. 

There are good arguments for hiking by 50 bps already now. However, some analysts expect the NB to stick to 25 bps this week.

Nordea

“We expect Norges Bank to hike its policy rate by 25 bps in June and signal that the next interest rate hike will come at the meeting in August. We see the new rate path signaling an overwhelming probability for four more rate hikes after June until the end of 2022. 

TDS

“We expect a 50 bps hike in June and 25 bps hikes through to mid-2023, bringing the terminal policy rate to 3.00%, well above Norges Bank's estimate of 1.7%. This overshoot is driven by a number of factors, but unique to Norway in the region is its oil and gas exports, which are now in especially high demand owing to the war in Ukraine. Only as inflationary pressures wane do we expect the central bank to cut rates, reaching a neutral position of 2.50% by the end of 2024.”

ING

“With oil prices high and global market interest rates rising, we think Norges Bank will follow through with a 50 bps hike next week – or failing that, hint strongly that it could begin hiking at every meeting, as opposed to every alternate one.”

Danske Bank

“We expect NB to hike policy rates for the fourth time in this cycle by 25 bps. We expect NB to stick to its 'gradual' strategy but also open the door for an August hike. We expect a forward guidance signal of close to a 50/50 split between August and September as the timing for the next 25 bps hike but still with verbal guidance towards September. We expect the top point of the rate path to fall in the 2.50-2.75% range by end-2023 and that the subsequent inversion will prove steeper than in the March Monetary Policy Report leaving a close to unchanged end-point of around 2.3% in Q4 2025. The steeper inversion reflects a much worse employment-inflation trade-off than expected in the last monetary policy report. If this call proves right it would be a disappointment to markets and lead to lower short-end rates. Admittedly, the balance of risk to our call is skewed towards a more aggressive NB.”

Swedbank

“We should not rule out the bank will opt for 50 bps – something the Bank has not done in more than 20 years. 50 bps clearly remains a viable option, but we stick to our long-held view that Norges Bank will deliver a standard hike of 25 bps, but front-load the hikes to include both a hike in August and high probability for a hike also in November – in addition to the more conventional hikes in September and December.”