The Norges Bank kept its policy rate on hold as had been unanimously expected and also laid the groundwork for the start of a tightening cycle later this year. The krone jumped by about 0.7% against the euro after the announcement. Economists at TD Securities expect the EUR/NOK pair to push below 10 in the near-term.
Key quotes
“The Norges Bank kept its policy rate on hold, but its rate projections were a touch stronger than markets anticipated, with the door opened ever so slightly to the possibility of a rate hike as soon as September. The Norges Bank will be leading the rest of the G10 in delivering the first rate hike later this year.”
“We continue to look for EUR/NOK to resume its trend lower. While some degree of immediate support appears to be in place around the 10.0250 level, we look for the cross to push lower through the psychologically-important 10 barrier in the near-term.
“Beyond the 10.00 mark, we note that the next major reassessment level does not come into the picture until we get down below 9.82.”
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