The Norges Bank was an early adopter of policy tightening, beginning back in September. Economists at CIBC Capital Markets believe that the Norges Bank is set to up its rate tightening profile, supporting the krone.

Upside inflation concerns risk coinciding with ongoing labour market tightness

“While headline inflation currently remains close to target, there are concerns over imported goods price inflation, in particular in food. In terms of the policy outlook, any such upside inflation concerns risk coinciding with ongoing labour market tightness, a scenario represented by a low unemployment rate and elevated wage growth.”

“As the labour market remains tighter than the Norges bank had previously anticipated, this raises the prospect of the Norges Bank considering upping the tightening profile come the June meeting, maintaining a supportive NOK bias.”