Norges Bank to keep its policy rate profile unchanged - TDS

The Norges Bank has its first rate decision in three months today, after a long summer break and over the last three months a lot has changed in the global central banking world, with the Bank of Canada beginning its hiking cycle, the Bank of England hinting that its own is about to commence, and the Riksbank sounding a lot more comfortable with currency strength than it has in the past, while the ECB continues to debate what’s to happen with its tapering programme past the end of 2017, explains he analysis eam a TDS.

Key Quotes

“So the big question is whether the Norges Bank decides to join the club of more hawkish central bankers, or whether after already making the move to remove its easing bias in June, it keeps its policy rate profile unchanged.  We think that although the Norges Bank isn’t expecting to deliver its first rate hike until the second half of 2019, there isn’t any compelling reason to change that stance right now.  Inflation is still miles below target, and projected to remain there for some time, the macro data has been fine but not really much better than expected, and the appreciation in NOK should largely balance out the rise in crude oil prices. So we look for the policy rate profile to remain more or less unchanged, leaving the Norges Bank as a bit of the odd man out among European central banks, and leading to a bit of a dovish market reaction.”