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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 36 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 36 institutional desks. No promotion.
Lead — The desk views Norges Bank's path toward potential rate hikes as cautiously optimistic despite recent cooler inflation data, suggesting the first hike may still occur in September. Per the full note from ING, the Norges Bank's inflation projections have weakened, leading to a hesitant outlook for August, although they still anticipate further tightening this autumn. The desk notes that while the current inflation metrics are softer than originally expected, there remains an expectation for underlying inflation to rebound, which will be pivotal for future rate decisions. We are currently positioned with the consensus target for the Norwegian Krone at 1.075 against the euro, reflecting contrasting views among key institutions.
The desk articulates a stance that Norges Bank still has room to hike rates later this year, with a likely September move as inflation pressures could respond positively despite the recent softening. Per the full note from ING, while current inflation measurements suggest caution, the potential for a rebound remains, indicating Norges Bank still leans toward tightening this fall.
Key metrics show that headline CPI and CPI-ATE have failed to meet the central bank’s prior expectations, with July's CPI-ATE holding at 2.7%, below Norges Bank's forecast of a rise to 3.3%. This mismatch raises questions about the sustainability of current inflation trends and the bank's response strategy moving forward.
Our consensus target for the EUR/NOK is set at 1.075, with a range between 1.04 and 1.12. Specific targets include:
This view aligns closely with the average consensus, reflecting the cautious optimism shared among forecasters like jpmorgan. Unlike some diverging forecasts from bofa, which propose a weaker outlook for NOK, we see greater upside potential, especially if inflation begins to meet the bank's targets.
Aligning with our view, firms such as jpmorgan share an optimistic take on NOK, anticipating further rate hikes and a stronger currency outlook. In contrast, bofa presents a more defensive position, suggesting subdued expectations for NOK's appreciation.
Related considerations should be given to the broader EUR/USD dynamics, as movements in the Eurozone may influence the trajectory of NOK positioning, particularly in the context of Norges Bank’s rate decisions and future ECB actions.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
Market implications
Traders should watch for inflation data leading up to the September Norges Bank meeting. A continued softening in inflation could shift expectations of a rate hike, while a recovery trajectory could strengthen NOK further. Positioning ahead of this key event remains crucial for tactical trades.
Risks to this view
Should inflation metrics continue to underperform expectations, or if Norges Bank signals a prolonged pause on rate tightening, these factors could significantly alter the projected trajectory for NOK and undermine the current bullish outlook.
Articles Norges Bank can still hike this year Published 14:30 Norway Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Cooler inflation means a hold is likely at Norway’s central bank meeting on 13 August. Our conviction on further tightening has somewhat weakened, but we still lean in favour of another hike in autumn on the back of an underlying inflation rebound. We remain optimistic on NOK into year-end, even though upside room for front-end rates looks limited Francesco Pesole Norges Bank in Oslo Since Norges Bank’s hike to 4.25% in June, we have been expecting one more hike this year, with September as our baseline and some underpriced risk of a surprise move in August.
Our baseline was September but saw some underpriced risks of a surprise August move. However, the latest inflation prints have weakened that conviction. We now see a very low risk of a 13 August hike and lower odds of a follow-up move in the autumn, although another hike remains our base case.
Inflation improvement may be temporary Norges Bank focuses on two inflation gauges: headline CPI and underlying CPI-ATE. Headline inflation fell to 2.7% in June before rebounding to 3.0% in July. CPI-ATE also dropped to 2.7% in June, but then unexpectedly held at 2.7% in July.
That is notably softer than Norges Bank's June projections, which envisaged CPI-ATE rising to 3.3% in June and remaining above 3.0% until mid-2027. Underlying inflation undershot projections in June and July Source: ING, Norges Bank, Macrobond "> Source: ING, Norges Bank, Macrobond The issue is not whether Norges Bank would hike with CPI-ATE at current levels. We struggle to see a case for that.
The last time CPI-ATE was below 3.0%, at 2.8% in May 2025, Norges Bank cut rates. Its published projections imply a similar reaction function around mid-2026, when it expected to begin easing. The more important question is whether underlying inflation rebounds.
The June 2025 rate cut proved a policy mistake because Norges Bank placed too much weight on a single inflation print. Inflation quickly moved back above 3.0%, highlighting a degree of month-to-month volatility that we think policymakers now take much more seriously. Our estimates still point to CPI-ATE moving back above 3.0% this autumn.
Recent base effects have weighed on inflation and could begin to reverse as early as August, partly because of the kindergarten price cap. Wage growth also remains elevated, with the 2026 wage settlement at 4.4%. Hold in August, but another hike remains possible We also think the bar for another hike is relatively low.
Policymakers have consistently framed this tightening cycle as a response to persistent inflation rather than temporary shocks such as the Middle East conflict. Their June guidance amounted to a semi-commitment to further tightening, and we doubt that bias will disappear after only two benign inflation prints, particularly given the recent volatility in the data. For this August meeting, we expect a rate hold with some acknowledgement of a tentatively improved inflation picture.
But we do not expect Norges Bank to remove references to further tightening at coming meetings. Whether that language stays or goes will be the key hawkish-dovish signal for markets. Our base case remains one final hike this year as inflation pressures re-emerge in the autumn and Norges Bank reinforces its anti-inflation stance.
September is still our marginal favourite, although the November and December meetings give policymakers flexibility to wait for more data. We are, however, less convinced than before that further tightening will materialise. If underlying inflation fails to rebound, Norges Bank should gradually drop its tightening bias and shift towards signalling an extended pause.
More upside for NOK than front-end rates The next few CPI releases will be critical for market pricing. OIS markets price just 3bp for August, rising to 14bp for September and 25bp by December. That suggests investors are not placing excessive weight on the latest inflation prints, but it likely also reflects spillovers from hawkish policy expectations in the US and eurozone.
We see limited upside for NOK front-end rates from current levels. Our conviction on another hike has diminished, and NOK rates could also benefit from dovish repricing in the US if the Fed remains on hold for the rest of the year. Another risk is that Norges Bank softens its hawkish messaging already in August, weakening market expectations for further tightening.
For NOK, we see some downside risks around this August meeting but not beyond the very short term. Another hike (our baseline) would strengthen an already attractive carry profile and reinforce support from improved terms of trade. But even if Norges Bank does not deliver another move, the impact on NOK versus EUR and USD may prove modest if markets are also forced to reprice the Fed and ECB in a more dovish direction.
The broader oil and gas story remains supportive. Energy prices holding above pre-Middle East war levels should continue to favour NOK, particularly alongside attractive yields in a carry-friendly environment. We’ve recently published a new set of FX views and updates in “ FX Talking: Caught between war and Warsh ”.
We target a gradual descent in EUR/NOK to 10.75 by year-end. Our latest EUR/NOK forecast Source: ING, Refinitiv "> Source: ING, Refinitiv Norway Norges Bank NOK Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Author Francesco Pesole FX Strategist Francesco is an FX Strategist and has been with the firm since May 2019. His main focus is on the G10 space and, in particular, on European and commodity currencies. He began his career at Credit… In this article Inflation improvement may be temporary Hold in August, but another hike remains possible More upside for NOK than front-end rates
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