Although the Norwegian inflation figures for March look a little better again after the significant upward surprise at the beginning of the year, Norges Bank is still likely to wait until June before lowering the key rate, Commerzbank’s FX analyst Antje Praefcke notes.
NOK struggles amid weak oil and risk aversion
“After all, both the headline and core rates, at 0.24% and 0.31% respectively, seasonally adjusted in a month-on-month comparison, remain above the level that would be consistent with the inflation target. So there is still some way to go before Norges Bank will be willing to start the rate cut cycle. Which is why I also think that it will wait for the April and May figures before even considering cutting in June.”
“However, this is unlikely to help the NOK in the short term. After all, weak oil prices and risk aversion in the market remain major negative factors for it, which is why we have also adjusted our EUR/NOK forecasts upwards at the short end. However, the latest move above 12 in EUR/NOK looks to me as an overshooting, so there is a little potential for the krone to recover.”
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