Jonas Goltermann, Developed Market Economist at ING, notes that the Norges Bank has maintained its policy rate at 0.75% today with policy statement giving a clear commitment that the next rate hike will come in March 2019.
Key Quotes
“The interest rate forecast further out has been adjusted down slightly as the central bank continues to signal a further hike in the second half of 2019, but now shows only three more hikes in the 2020-21 period (vs four previously).”
“At the same time, the counter-cyclical capital buffer (an additional capital requirement for Norwegian banks) will be increased by 0.5pp to 2.5%, effective after 2019. This indicates the NB remains concerned about the high indebtedness of Norwegian households but prefers using other tools than the interest rate to address this issue.”
“We continue to see the central bank as the most hawkish central bank in Western Europe, and the still robust near-term outlook for the Norwegian economy will support their rate-hiking stance into 2019.”
“While uncertainty has increased over the past couple of months, we think that barring a further drop in oil prices, the NB is more likely to keep hiking rates according to its plan than other central banks in the region.”
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