James Smith, developed markets economist at ING, explains that after having raised rates to 1% back in March, the Norges Bank hinted back then that a June move also was reasonably likely.
Key Quotes
“The central bank’s most recent statement now points explicitly to a June rate hike. In turn, this begs the question of whether the central bank will hike rates for a third time later this year.”
“A lot will depend on the outlook for global trade, which has been clouded by the recent escalation in tensions between the US and China. Our trade team believe a deal is still the most likely outcome, given that President Trump will not want to enter an election year with a weaker economy and a falling stock market. But given that this may not come until the second half of the year, uncertainty is likely to weigh on global economic sentiment in the meantime.”
“Domestically though, the case for further tightening looks fairly solid.”
“As such, we think there is a reasonable chance that the Norges Bank will raise rates further in December, as well as at the forthcoming meeting in June.”
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