📝 Short-End Pricing Is More Aggressive Than Norges Bank's Signaling: Danske Bank

Norges Bank is widely expected to leave the policy rate unchanged at 0.75% and reiterate the 25bp June rate hike message at its interim meeting this week. The big question in markets is whether NB could hike rates by more than 25bp per quarter. It is our clear interpretation that the risk of NB hiking policy rates by more than 25bp has fallen - yet markets price an increased likelihood amid the repricing of the Fed and not least the ECB and Riksbank. Markets price an accumulative of 105bp additional rate hikes this year with a notable 20bp priced for the interim August meeting. We think this pricing is too aggressive. - Danske Bank FX Research