Jonas Goltermann, developed market economist at ING, points out that the Norwegian central bank kept rates on hold at today’s meeting, while reiterating that “the policy rate would most likely be raised in March 2019”.
“This confirms our view that the NB is more likely to stick to its rate hiking plan than markets are currently pricing in, and more likely to retain a relatively hawkish policy stance compared to most other central banks over coming quarters.”
“The key feature of the January policy statement is the growing divergence between the domestic outlook and developments in the global economy. The Norwegian economy remains solid, with employment growing and price pressure increasing.”
“To the extent that markets are still not fully pricing the March hike, this should support NOK outperformance vs peers in the run-up to the March meeting. Especially if, as we expect, Norwegian data remains solid while peer economies (e.g. EZ, Sweden) continue to disappoint.”