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Erik Johannes Bruce, analyst at Nordea Markets, points out that the Norges Bank will publish its interest rate decision on 9 May 10.00 CET and suggests that a hike now is out of the question with the May meeting being an interim meeting and there will neither be a new interest rate forecast nor any press conference.

Key Quotes

“Norges Bank knew what it did when it gave a June hike more than “50%” probability in the March rate path. If news is in line with its forecast in March and the risk picture does not change it will hike. However, by the path not being fully consistent with a June hike it signalled that it would not take much in the form of downside news for it to postpone the hike. This means that one should expect a June hike if Norges Bank now concludes as it did on the “in between meeting” in January: “Overall, new information indicates that the outlook for the policy rate for the period ahead is little changed”.”

“Still, we are not in doubt that Norges Bank, if it were to make a rate path, would have lifted it. NOK is currently about 2% weaker than expected even though oil prices have increased. The combination of higher oil prices and weaker NOK argues for about 15 -20 bp higher rates at the most if Norges Bank should have made a path today (also taking into account expected lower rates abroad). The combination would have been more than enough to lift the average Q3 key rate level from 1.20% to above 1.25% which means a “100%” probability of a June hike.”

“We are therefore quite certain that Norges Bank at least will say that the “outlook for the policy rate for the period ahead is little changed”. It might go further and indicate that news is on the strong side.”