NOK to appreciate Norges Bank sticks to its rate path for now – Commerzbank

Norges Bank’s rate meeting today might get interesting. In the view of economists at Commerzbank, the Krone could strengthen if the central bank sticks to its current rate path.

Market might consider Norges Bank to be too dovish

“Norges Bank is likely to hike the key rate by 25 bps to then 2.75%, which is priced in by the market. It will be more interesting to see whether Norges Bank will change its rate path or will cancel the second rate step signalled.”

“In my view, it will not have to throw out the baby with the bath water right away and already reject a further rate step in 2023 at this stage. It could simply limit itself to stressing the uncertainty of the outlook. After all uncertainty as regards inflation and the economy remains high for all central banks.”

“The market might have gone too far in its expectation that Norges Bank will sound dovish so I would not be surprised if NOK was to appreciate if Norges Bank were to stick to its rate path for now, while only underlining the weaker outlook for growth.”

See – Norges Bank Preview: Forecasts from five major banks, last hike in December?