Norges Bank prepares for next interest rate cuts next year – Commerzbank

In the end, Norges Bank did what was perceived as reasonable by the markets. It has maintained its position that the key interest rate will not be cut until next year, notes Commerzbank currency analyst Antje Praefcke.

The weak krona remains a concern for Norges Bank

“Although inflation has fallen somewhat more strongly than expected, the weak krona remains a concern for Norges Bank, which is why it does not want to cut the key rate prematurely.”

“Norges Bank removed from the statement the reference to possible interest rate increases. “We believe that there is a need to keep the monetary policy rate at today’s level for some time to come, but that the time to ease monetary policy is approaching,” the central bank governor said.

“In short, Norges Bank is still tight as it continues to see risks to inflation. However, it sets up the rate cut cycle by no longer invoking the possibility of a rate hike. The market is likely to view the prospect of a rise in the real interest rate positively, which is why the krona was able to appreciate moderately even after the decision.”