2018.12.1203:35:00UTC+00Norges Bank To Raise Rates Twice In 2019: ING

Norway's central bank is likely to raise interest rates twice next year, despite the slump in oil prices, ING said Tuesday.

The first hike could come in March, ING's economist Jonas Goltermann said.

The Norges Bank is set to announce its latest interest rate decision on December 13. The bank is widely expected to leave the key rate unchanged at 0.75 percent.

"But while near-term prospects for the Norwegian economy still look solid, the outlook further out is getting gloomier and we expect a bit more caution from policymakers," Goltermann added.

While lower oil prices and a weaker global outlook argue for a lower interest rate path, the increased oil investment, somewhat stronger price pressure, and the weaker krone push the other way, the economist noted.

Beyond 2019, a lower interest rate path is likely and the bank is expected to reduce the 2020-21 segment of the path to closer to three hikes, he added.

"Still, we believe this leaves the Bank as the relatively most hawkish central bank in Western Europe," Goltermann said.

"And given the market is currently pricing only one rate hike for 2019, the balance of risks ahead of the NB's meeting is probably skewed towards somewhat higher rates and a stronger krone."