EUR/NOK to fall back to 10.20 as NB gives green light for September rate hike – ING
Norges Bank’s confirmation that rates will be raised in September failed to have any positive impact on the Norwegian krone. For NOK to start benefiting from the NB hawkishness, we will need to see some improvement in sentiment surrounding global growth and risk appetite, according to economists at ING.
Monetary tightening overshadowed by unstable sentiment
“Norges Bank says it's likely to raise rates in September, and we can expect another one in December and probably two more in 2022.”
“We need to start seeing some improvement in the global growth outlook and risk sentiment in order for the krone to benefit from NB hawkishness.”
“The Delta variant's spread continues to cloud the outlook and adds a high degree of uncertainty when we could see sentiment stabilise. We are still inclined to think this could happen in the last quarter of 2021, and we see room for EUR/NOK to move back to the 10.20 level as a hawkish NB stance could eventually start to pay dividends for NOK.”
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FXStreet Insights Team
FXStreet
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