Nordea's Chief economist Kjetil Olsen and Senior Macro and FX Strategist Sara Midtgaard note that the central bank of Norway, Norges Bank now signals a policy rate hike to 4.25% at an upcoming meeting, with the new path pointing to 4.25–4.50% by year-end. They stress the central bank is more concerned about inflation and still expect the key rate at 4.25% in June and likely 4.50% by December.

Central bank signals further tightening

"Norges Bank signals a rate hike to 4.25% at one of the forthcoming monetary policy meetings and the new path indicates an increase in the policy rate to between 4¼ and 4½% by the end of this year."

"The new rate path from Norges Bank reflects a central bank more concerned about inflation."

"This means that even if the conflict is over tomorrow, one should expect a rate hike before summer."

"As we expected, Norges Bank now thinks they need to restrain the economy more than previously anticipated to bring inflation back to target within a reasonably time horizon."

"We therefore still think Norges Bank will hike its key rate to 4.25% in June and also that there is a greater chance that the key rate is 4.5% than 4% by year end."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)