Norges Bank: Hawkishness may be on the way - ING

In December, Norway's central bank delivered an upbeat assessment of the economy, revising up forecasts for GDP and inflation, and shifting forward the expected date for its first rate hike by two quarters into December 2018, notes the research team at Danske Bank.

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“Since then, the data has been largely as the Bank expected: inflation rose to 1.6%, and activity indicators have been consistent with 0.6% Q4 growth. House prices did continue to fall in December, but at a moderate pace that will not overly worry the central bank.”

“Rising oil prices suggest more hawkishness may on the way. The Norges Bank will probably be pleased that the positive correlation between the Norwegian krone (NOK) and oil prices have returned in 2018. Since December's meeting, Brent is up another 9% and the Norwegian Petroleum Directorate published a fairly upbeat forecast for hydrocarbon production and exploration in 2018 and beyond (a key driver for Norwegian growth). That means there is a chance of further upward revisions to the Norges Bank's forecast, though that is most likely a story for March or June, should the oil price hold up.”