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- EUR/NOK: Market finds Norges Bank’s more restrictive approach credible, supporting Krone – Commerzbank
EUR/NOK: Market finds Norges Bank’s more restrictive approach credible, supporting Krone – Commerzbank
NOK trended stronger after Norway’s inflation on Monday. Economists at Commerzbank analyze Krone's outlook.
Norges Bank expects the terminal rate to be 4.25%
In June, NB proved to be courageous and sent out another restrictive signal ahead of the summer break. It hiked the key rate by 50 bps to 3.75% and signalled a further rate step for August. It expects the terminal rate to be 4.25%. If inflation remains stubbornly high it is quite possible though that Norges Bank takes even further action and that the terminal rate will be even higher in the end.
A lot can happen until then though. But high price data in conjunction with economic data that points towards a reasonably robust economy are likely to principally support NOK in view of Norges Bank’s determined approach as this increases the likelihood of a higher terminal rate.
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