The Norges Bank was a leader in terms of policy tightening, beginning back in September 2021. Economists at CIBC Capital Bank see rates peaking at the end of the year.
One last hike for the Norges Bank?
Having hiked rates on 13 occasions, the Norges Bank remains biased towards an additional 25 bps prior to year-end. Absent a material and unexpected retreat in the data, we would look for rates to reach a terminal at 4.50%, by year-end.
The combination of additional tightening, energy price resilience, supporting an already exaggerated current account surplus, allied to ongoing labour market tightness points towards EUR/NOK trading well below July/August extremes into early 2024.
EUR/NOK – Q4 2023: 11.25 | Q1 2024: 10.76