Norwegian Krone: Softer Norges Bank stance weighs – BBH

Brown Brothers Harriman’s (BBH) Elias Haddad reports Norwegian Krone weakness after Norges Bank left rates at 4.25% but softened its hawkish bias. Forward guidance shifted from a likely hike to a more conditional stance, dropping an explicit call for tighter policy. Haddad notes that further downside inflation surprises would reduce hike odds, though Norway’s carry still supports NOK.

Less hawkish guidance hits Krone

"NOK weakened after the Norges Bank delivered a less hawkish hold. As was widely expected, the Norges Bank left the policy rate at 4.25% for a second straight meeting."

"Norges Bank softened its hawkish bias. It shifted from signaling that another rate hike was “likely” at “at one of the forthcoming monetary policy meetings” to simply noting “It may still become necessary to raise the policy rate.”"

"The Norges Bank also dropped its explicit call for a tighter stance, reiterating only that “a restrictive monetary policy stance is still needed.”"

"Further downside surprise in Norway’s inflation backdrop relative to the Bank’s projection will weaken the case for an additional rate hike. Still, Norway’s attractive carry remains supportive of NOK."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)