TD Securities analysts note that the Norges Bank delivered the 25bps rate hike today that was fully expected, and signalled its intention to raise rates again in H2, in September in particular.
“We maintain our forecast for the next rate hike to come in Q1 2020, but with a very wide uncertainty band around that timing. If everything goes right then the Norges Bank could certainly raise rates again in September; but equally, a materialization of downside risks could see the Norges Bank remain on hold until 2021, leaving us without sufficient confidence to pull our rate hike forecast forward.”
“The Norges Bank's slight upgrade to their near-term rate path highlights the growing degree of monetary policy divergence to the rest of its G10 peers. This should fuel some further NOK appreciation against the EUR and its other G10 peers, but progress is likely to slow from here as the broader risk backdrop remains fragile.”