Norges Bank hikes by 25bps to 3.00% vs exp. 3.00% (prev. 2.75%); the policy rate will be raised further in May; decision unanimous

INFLATION:

• Consumer price inflation among Norway’s main trading partners has receded somewhat in recent months but is still high.
• Wage growth has been higher than projected in December, and there are prospects that it will remain higher than projected earlier in 2023 too.

NOK

• The krone is now significantly weaker than projected in the December Report.

REPO PATH: 

• Mar’23 2.78% (prev. 2.82%), Jun’23 3.18% (prev. 3.03%), Sep’23 3.52% (prev. 3.11%), end-2023 3.60% (prev. 3.08%), end-2024 3.45% (prev. 2.78%), end-2025 3.02% (prev. 2.38%)
• If the krone proves weaker than projected, or pressures in the economy persist, a higher policy rate than currently projected may be needed to bring inflation down to target. If inflation falls faster or unemployment rises more than projected, the policy rate may be lower than projected.

INFLATION FORECASTS (CPI-ATE): 

• Mar’23 6.19% (prev. 5.86%), Jun’23 6.01% (prev. 5.76%), Sep’23 5.42% (prev. 4.85%), end-2023 4.88% (prev. 4.29%), end-2024 3.44% (prev. 3.17%), end-2025 2.64% (prev. 2.45%)

Via Norges