Petr Krpata, CFA, Chief EMEA FX and IR Strategist at ING, notes that the Norges bank did not deliver any surprises today as the widely expected decision to remain on hold was accompanied by the largely unchanged interest rate forecast.
Key Quotes
“The interest rate path for 2H21 has been marginally upgraded higher too. The unchanged / very marginally higher interest rate outlook reflects the growth and CPI forecasts for the next three years which were either unchanged or very modestly upgraded. In short, no big surprise and the Nordic central bank may still raise interest rates next year if the domestic economy does well and NOK is not overly strong.”
“We have seen a positive NOK reaction to the decision today, largely because the unchanged prospects of a partial rate hike in 2020 and the currency’s attractiveness on the carry – valuation matrix makes it stand out in the European G10 FX space. EUR/NOK is trading below the 10.00 psychological level for the first time since early October this year.”
“We target the EUR/NOK 9.80 level by end-January 2020.”
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