In a surprise decision, Norges Bank this morning cut policy rates by 50bp in an emergency move. Analysts at Danske Bank has now updated their forecast for further cuts from the Nordic institution. EUR/NOK moves around 11.135.
Key quotes
“We believe it is fair if markets now fully price slightly more than 25bp for June (some probability for May or another emergency cut is fair) and probably also close to another full 25bp for September.”
“We expect the market to move its probability mass on sight deposit rates reaching 0.50% from 2021 to H2 20.”
“Further out, we see potential for a steepening in something like Sep20-Sep21. In addition, we note that Norges Bank pencils in a sharp currency appreciation over the coming years.”
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