NOK: Policy shift supports restrictive stance – Commerzbank

Antje Praefcke at Commerzbank highlights that Norges Bank has turned more hawkish after the Middle East war pushed up energy prices and inflation risks. The policy rate remains at 4%, but guidance and the rate path now signal a hike in June and possibly further moves later in 2026. However, she stresses that developments in the Middle East and Oil prices remain the main drivers for NOK.

Norges Bank signals June rate hike

"At its meeting in late March, Norges Bank made a U-turn."

"Despite leaving the policy rate unchanged at 4%, they noted: It will likely be appropriate to raise the policy rate at one of the forthcoming monetary policy meetings."

"According to Norges Bank, higher energy prices will likely reduce global growth and push up inflation both abroad and in Norway."

"For this reason, the Committee judges that a more restrictive monetary policy stance is needed to bring inflation back to the 2% target within a reasonable time horizon."

"It adjusted its interest rate path accordingly; this now signals a rate hike in June."

"Depending on how economic and inflation outlooks develop, however, the policy rate could be raised further in the second half of the year."

"Therefore, developments in the Middle East conflict and oil prices remain the main drivers for the NOK."

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