Norges Bank Preview: Forecasts from five major banks, set for another 50 bps

Norges Bank meets on Thursday, September 22 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. 

Norges Bank is expected to hike rates by 50 basis points to 2.25%. Furthermore, updated macro forecasts and expected rate path will be released this week.

Credit Suisse

“Weaker data reduce risks of an acceleration in the pace of Norges Bank tightening above 50 bps.”

Swedbank

“We believe Norges Bank is likely to continue hiking until it sees a sustained slowdown of inflation, or, alternatively, a profound decline in household consumption together with rising unemployment. We expect a 50 bps rate hike in September, followed by 25 bps rate hikes in November and December, reaching 2.75% at the end of this year.”

TDS

“While the recent inflation readings suggest that at least a 50 bps hike is warranted in September, we think that weak growth and slowing inflation expectations data mean that a 75 bps increase should be off the table. The Bank is already five hikes into its tightening cycle and just raised its policy rate into restrictive territory as of last meeting, albeit just barely. Therefore, we look for a 50 bps hike at the September meeting, followed by sequential 25 bps hikes to reach a terminal rate of 3.25% in 2023Q1.”

ING

“Norway’s central bank stepped up the pace of rate hikes in August, and core inflation has continued to push higher than Norges Bank’s most recent forecasts in June. The message from the August meeting was that the central bank is keen to continue front-loading tightening, and we expect another 50 bps hike. That would take the deposit rate to 2.25%, and we’d expect another 50 bps move in November.”

Commerzbank

“Norges Bank hiked its key rate by another 50 bps to 1.75% in August and signalled further rate hikes as well as an increase in the rate path in September. The market is pricing in 50 bps. That means Norges Bank would have to raise its rate path quite considerably and deliver a hawkish statement to support NOK additionally. The recent regional business survey illustrated that the risks for growth have risen though. Moreover, inflation might begin to peak soon. So it is not certain that Norges Bank will be much more restrictive than it was before. I fear it is more likely to refer to the downside risks for the economy, and I, therefore, see little upside potential for NOK.”