Norges Bank: Two more hikes to take the policy rate to a terminal of 4.25% – TDS

Norges Bank returned to 50 bps hikes today to 3.75%. Its rate projection was revised sharply higher. Economists at TD Securities consequently look for two more hikes to take the policy rate to a terminal of 4.25%.

Back to the fifty

Norges Bank accelerated its rate hike pace by delivering a 50bps hike to 3.75% at today's meeting. Adding to the hawkish hike, the Bank significantly upgraded its macro and rate projections. 

Today's decision is a strong statement from Norges Bank, with the Bank clearly showing that it is ready to do whatever is necessary to bring inflation back to target. 

In response to today's decision, we now expect Norges Bank to deliver two more 25 bps hikes in August and September, to a terminal rate of 4.25%. While we see risks as roughly balanced, uncertainty is high.