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Jonas Goltermann, Developed Market Economist at ING, points out that the Norwegian central bank raised the policy rate to 0.75%, in line with expectations.

Key Quotes

“The new rate path is only marginally lower and still signals two more hikes by the end of 2019. But this shift in the opposite direction of market expectations – for a higher rate path signaling the potential for three hikes in 2019 – suggests the NB has become cautious.”

“The policy statement indicates the next rate hike will come in 1Q19, which most likely means March, given the NB’s preference to move policy rates at meetings where they have a new forecast and a press conference.”

“The key takeaway from today’s meeting is that the NB may be uncomfortable with hiking rates at a faster pace than twice per year.”

“The Bank may still be open to a more aggressive stance once the initial uncertainty around the effect of higher rates passes (and if other sources of uncertainty such as the US-China trade war also fade).”