Norges Bank Preview: Do not expect any significant changes in communiqué - Nomura
|At Norges Bank meeting new economic forecasts will not be released and analysts at Nomura we do not expect any significant changes in Norges Bank’s communiqué, pencilling in a Q1 2019 hike (most likely March).
Key Quotes
“The domestic data backdrop has been largely positive, with September’s core CPI inflation surprising the consensus and Norges Bank forecasts on the upside. Oil prices have continued to edge higher, and could provide some tailwinds – though the external demand backdrop remains challenging.”
“On balance, Norges Bank’s hiking message is likely to be unchanged, limiting NOK downside at this meeting. However, momentum in domestic data has turned less positive in recent months and is stabilising at just-above-trend levels according to our metrics. While the rise in oil prices provides some upside risks to growth, we struggle to see domestic demand providing much support – particularly as indebted households adjust to now rising interest rates.”
“External risks also provide reasons for caution. With the market already pricing close to Norges Bank deposit rate projections, we believe there is limited upside for market pricing of Norges Bank hikes. This limits meaningful NOK upside in our view, meanwhile global risk aversion may also generate NOK downward pressure, particularly against the majors.We forecast EUR/NOK trading around 9.50 in the months ahead.”
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