The Norges Bank left its policy rate on hold at a record low of zero once again. The meeting had a limited impact on the krone with EUR/NOK largely unchanged. More importantly, the Norges Bank has reiterated its intention to hike rates later this year, and the only question is whether this happens in September or December. Either way, this bodes well for the krone – economists at ING look for EUR/NOK to head to 9.80 by year-end.
No fireworks today but more gains lie ahead
“Policymakers have reiterated their intention to hike rates before the end of the year, and the only remaining question is whether this happens in September or December.”
“For now, we’ve pencilled in a December move – and that’s perhaps supported by some slightly cautious comments in the latest policy statement on inflation and the risks surrounding the recovery.”
“We remain upbeat on NOK and expect EUR/NOK to persistently settle below the 10.00 level from summer onwards as the rebound in the eurozone and Norwegian economies, the more synchronised global recovery in the second half of the year and the NB being closer to the start of the tightening cycle all benefit the pro-cyclical NOK.”
“The supportive environment for commodity prices is also good news for the oil-exposed currency. We target EUR/NOK 9.80 by year-end.”
