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Erik Johannes Bruce, analyst at Nordea Markets, suggests that they are seeing the risk to Norges Banks picture as balanced and hence believe in a June hike, after the central bank has signalled a June hike if development is in line with forecast.

Key Quotes

“In its new rate path Norges Bank indicates that that the next rate hike most likely occurs already in June, as opposed to September in the old path. Taking the path seriously, rates will be hiked again in June if the economy in sum develops as expected. However, with a path not fully consistent with a June hike, Norges Bank signals that it will not take that much of negative surprises to postpone the hike.”

“Norges Bank moved the first hike forward due to a much brighter outlook for the domestic economy and a weaker than expected NOK. Norges Bank raised its 2019 forecast for mainland GDP growth, employment, core inflation and wage growth, and this more than counteracted a rather sharp downward revision to its view on growth among trading partners.”

“To a large degree, we share Norges Bank’s new and more optimistic view and see the risk to its forecast as rather balanced.”

“After a hike in June we now forecast a next hike in December 2019 and then two more hikes in 2020.”