Norges Bank will have to raise its rate path quite considerably to support NOK – Commerzbank

Norges Bank (NB) hiked its key rate by another 50 bps to 1.75% in August. At Thursday's meeting, the central bank will have to raise its rate path significantly to propel the krone, economists at Commerzbank report.

NB to refer to the downside risks for the economy

“The market is pricing in 50 bps. That means Norges Bank would have to raise its rate path quite considerably and deliver a hawkish statement to support NOK additionally.” 

“The recent regional business survey illustrated that the risks for growth have risen. Moreover, inflation might begin to peak soon. So it is not certain that NB will be much more restrictive than it was before. I fear it is more likely to refer to the downside risks for the economy, and I, therefore, see little upside potential for NOK.”