NOK: Norges Bank hawkish hold supports currency – Danske Bank

Danske Research Team highlights that the central bank of Norway, Norges Bank delivered a hawkish hold at 4.00%, with internal debate over an immediate hike and an upwardly revised rate path. The bank now expects two 25bp hikes in June and September, followed by cuts from 2027. EUR/NOK briefly fell to 11.10 before partially reversing as weaker equities weighed on the Norwegian Krone (NOK).

Rate path revision and EUR/NOK reaction

"In Norway, Norges Bank unanimously held the key policy rate unchanged at 4.00% in a 'hawkish hold'. The newly included "Summary of the Committee's deliberations" showed how some members had argued for an immediate hike, while others preferred to await more information on the prospects for inflation."

""Judgement" was used to lift the rate path by 20-45bp, showing a short-term desire to tighten policy. We have revised our Norges Bank call, now expecting two 25bp hikes, in June and September, this year, followed by four 25bp rate cuts in 2027, and a final 25bp cut in 2028."

"EUR/NOK fell sharply yesterday and briefly touched 11.10 after Norges Bank signalled upcoming rate hikes. The pair partially reversed course as falling equities weighed on the NOK."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)