Erik Johannes Bruce, an analyst at Nordea Markets, notes the Norges Bank removed the last doubt about the June hike at the last MPC meeting.
- The question at the June meeting will be how the new rate path will be and when to expect the next hike. It is easy to argue for the next hike to be in September given the current combination of weaker NOK and higher oil prices. However, Norges Bank has clearly indicated that it will move slower than its normal reaction function dictates.
- For now, we think it will prefer to signal the next hike in December and raise the path in 2020, indicating two hikes in 2020 in contrast to only one in the current rate path.
- But it is a close call and next week’s data could influence the rate path, especially the Q2 oil investment survey (28. May) and the May registered unemployment (31. May).
- Retail sales (29. May) is too volatile to have much influence on Norges Bank’s view. The figure for total consumption published 7. June will be more important.