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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.”