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16 Mar 2015
Norges Banks expected to cut rates 25 bp – JP Morgan
FXStreet (Edinburgh) - Analysts at JP Morgan see the Nordic central bank lowering its benchmark rate by 25 bp in this week’s meeting.
Key Quotes
“As for the Norges Bank, we expect a 25bp cut next week and a modest lowering of the rate profile to reflect the additional decline in oil prices and global rates since the December meeting”.
“This shouldn’t freak the currency out as much as the December rate cut did (when NOK suffered a nervous breakdown and EUR/NOK exploded from 8.90 to 9.90 over the subsequent week), not least as the curve prices just over two more rate cuts in this cycle (taking the terminal policy rate down to 0.7%)”.
“Nevertheless, a rate cut and forecast revisions in conjunction with the latest slippage in the oil price and evidence that the Norwegian economy is starting to show just a little more strain from last year's oil shock should encourage EUR/NOK towards 8.75-8.80”.
Key Quotes
“As for the Norges Bank, we expect a 25bp cut next week and a modest lowering of the rate profile to reflect the additional decline in oil prices and global rates since the December meeting”.
“This shouldn’t freak the currency out as much as the December rate cut did (when NOK suffered a nervous breakdown and EUR/NOK exploded from 8.90 to 9.90 over the subsequent week), not least as the curve prices just over two more rate cuts in this cycle (taking the terminal policy rate down to 0.7%)”.
“Nevertheless, a rate cut and forecast revisions in conjunction with the latest slippage in the oil price and evidence that the Norwegian economy is starting to show just a little more strain from last year's oil shock should encourage EUR/NOK towards 8.75-8.80”.