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Norges Bank now expected to cut rates – Danske Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 11, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    Jens Pedersen, Senior Analyst at Danske Bank, now sees the Norges Bank lower its repo rate by 10 bp at its March meeting.

    Key Quotes

    “Yesterday we changed our call for Norges Bank and we now expect it to cut rates by 25bp on 17 March. Since the December meeting, most of the factors affecting the rate decision and the rate path have surprised to the downside”.

    “Our view on the domestic economy remains unchanged and we expect it to be the last cut in this cycle”.

    “In respect of the NOK, we keep our EUR/NOK forecast unchanged targeting the cross at 9.60 in 3M. A full rate cut in March is not priced in and we think that risks mainly lie on the upside for EUR/NOK in the short term”.

    “Longer term, the NOK development continues to be heavily tied to how the economy is doing and thereby the oil price. A key part of the Norwegian transition phase is a weaker currency: when the oil price falls the NOK should weaken in the short term to counter the negative growth effect”.

    “However, we still expect the NOK to strengthen in H2 16 and we target EUR/NOK at 9.30 in 6M and 9.00 in 12M”.
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