Norwegian Key Policy Rate 1.75% vs. Exp. 1.75% (Prev. 1.25%) via a unanimous decision; policy rate will most likely be raised further in September.

• 
  Inflation has been considerably higher than projected and markedly above the 2 percent target.


• The rise in prices has been broad-based in recent months and may entail that inflation will remain high for longer than expected earlier.
  


• This suggests a faster rise in the policy rate than forecast in June. 
  


• 
  Unemployment has fallen a little more than expected and is at a very low level.


• There is a risk that little spare capacity in the Norwegian economy.


• The rise in interest rates and high inflation may cool down the housing market and curb household consumption faster than currently envisaged.

via Norges Bank

Reaction details (09:06)

• In an immediate reaction to the as-expected 50bp hike (note, some respondents were calling for a 25bp move) and guidance towards a September MPR hike the NOK saw modest appreciation with EUR/NOK dipping from 9.8800 to 9.8575 before retracing the move almost completely. Note, in the minutes since EUR/NOK has moved back towards the 9.8640 low.

Analysis details (09:11)

• Overall, very much as expected. The Committee unanimously voted for a 50bp move due to the inflation situation and a desire to take action now to avoid such pressures becoming entrenched and the need to tighten more sharply action in the future - a justification that is very in-fitting with June's 50 bp MPR hike.


• On the flip side, but again as expected and in-fitting with June, the Committee highlights the housing market and household consumption as areas to keep a close eye on in case rate hikes slow activity there faster than expected. However, the Norges Bank clearly judges the inflation situation to be more pressing at this juncture.


• Looking ahead, we have a few speeches from Governor Bache alongside the new Deputy Governor scheduled for today. Further out, the September MPR will be closely watched for updated forecasts - particularly regarding CPI-ATE and the Policy Rate; currently, from the June MPR, seen peaking 2022 at 4.09% (already surpassed) and 1.99% respectively.

18 Aug 2022 - 09:00- ForexImportant- Source: Reuters