Norges Bank seen on-hold today – TDS

Strategists at TD Securities expect the Nordic central bank to keep its monetary status quo unchanged at today’s meeting.

Key Quotes

“We’re in line with markets in looking for the Norges Bank to keep its policy rate unchanged at 0.50%. But we look for a much more dovish policy rate profile, and see odds of about 25% of a surprise rate cut at this week’s meeting”.

“The major driver is the substantial downside surprise to core inflation, which will necessitate a huge downward revision to the Norge Bank’s inflation forecasts. We think that the inflation outcomes have been weak enough to allow the Norges Bank to look through the household debt issue for the moment, and allow the government’s latest macroprudential measures to take hold”.

“With the NOK already seeing a sharp depreciation recently, positioning is likely to be flat heading into the Norges Bank. A sustained move higher from these levels may require a rate cut, however, as a dovish outcome may already be in the price and Norway’s overall fundamentals remain constructive”.