Norges Bank preview: Rate hike in June and probably September – Nordea Markets


According to Erik Johannes Bruce, analyst at Nordea Markets, Norges Bank will hike and most likely signal another hike in H2, most likely September, while the rate path will be on the high side to market expectations.

Key Quotes

“Norges Bank’s rate decision and a new rate path will be published at 10.00 Thursday 20 June. Given Norges Bank’s signals at the May meeting and the development in the economy there is little doubt that Norges Bank will hike key rates to 1.25% in line with the March path. The main question is how the rate path will be. We believe it will be lifted compared to the March path in the short end giving a high probability for a hike again in September and then one or two hikes in 2020. However, longer out it will be lower than the March path.”

“The path will be far on the upside to current market pricing, however markets will to a large extent ignore that. Nevertheless, that Norges Bank indicates faster rate hikes at a time where all other major central banks that we know about are doing the opposite will probably be a surprise to many. Therefore, we should see a stronger NOK and higher FRAs if we are right.”

“The main uncertainty this time is how Norges Bank will react to the latest uncertainty connected to the trade war. We do not think it will have a strong impact on the main scenario.”

“In sum, we believe in a path that gives a more than a 50% probability for a new hike already in September and then one or two additional hikes in 2020. The path will bend slightly down in the longer term. In other words, the path will contain rate cuts in 2021/2022.”

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD: traders set to position ahead of Fed

The EUR/USD pair moderated its advance on Friday, compliments to stronger-than-expected US data, finishing the week anyway with gains around 1.1070. Better-than-expected US data released Friday brought relief to USD bulls.

EUR/USD News

GBP/USD: Brexit optimism keeps bulls in the drivers’ seat

The GBP/USD pair has advanced for a second consecutive week, reaching Friday 1.2505, its highest since last July, and settling not far below this last. Fading odds for a hard-Brexit continue to underpin the Pound.

GBP/USD News

USD/JPY: further gains depending on risk-related sentiment

The USD/JPY pair settled above the 108.00 level for the first time since late July, closing substantially higher for a third consecutive week.  Demand for the safe-haven yen continued to be undermined.

USD/JPY News

Gold: Down for third straight week, on the defensive ahead of the Fed

Gold is set to end lower for the third straight week and will likely remain on the defensive in the run-up to Wednesday's Federal Open Market Committee (FOMC) meeting. A dovish surprise will likely put a strong bid under the yellow metal.

Gold News

The good, the bad and the extremely ugly crypto

XRP is in a borderline situation and with little room for doubt. Bitcoin demonstrates its power and positions itself as the emerging leader. Ethereum is in an intermediate situation, far from risk but also from opportunity.

Read more

Forex MAJORS

Cryptocurrencies

Signatures