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TD Securities analysts point out that the Norges Bank hiked its key policy rate to 1.00% today, as broadly expected, but bucking the international trend of international central banks, raised its forecast for future policy hikes to indicate another hike this year (with about one-third chance of a 2nd hike), and further hikes next year.

Key Quotes

“While the Executive Board acknowledged the deteriorating international picture, it focused on upside risks to the domestic economy, where inflation is running above target and wage growth is strong.”

“It’s worth noting that despite the upside revision to policy rates in 2019/2020, the Norges Bank’s forecast shows policy topping out just shy of 1.75% by the beginning of 2021, notably weaker than previous forecasts which had an upward trend through 2021.”