Skip to content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Norges Bank Raises Rates, Krone Rallies on Unexpected Hawkish Outlook

Norges Bank Raises Rates, Krone Rallies on Unexpected Hawkish Outlook

Dimitri Zabelin, Analyst

NOK TALKING POINTS – NORGES BANK, NORWEGIAN KRONE, CRUDE OIL PRICES

  • Norges Bank raises rates from 0.75%-1.00%
  • Hawkish outlook catches markets off-guard
  • Oil-linked economy sensitive to growth risks

See our free guide to learn how to use economic news in your trading strategy !

The Norwegian Krone rallied after the Norges Bank (NB) raised its benchmark interest rate from 0.75-1.00 percent, as anticipated. However, a surprise was delivered by policymakers who struck an unexpectedly hawkish tone, promptly sending the Krone higher. NB Governor Oeystein Olsen stated in a press conference that the central bank will likely raise rates once again in June.

NOK/USD, NOK/EUR, NOK/SEK, NOKGBP – 15-Minute Chart

Chart Showing Euro, Krone, US Dollar, Pound Sterling

Note: Conventional quoting is inversed to what is seen above. This was done to illustrate the Krone’s jump.

He also said the outlook points to a gradual rate increases as a result of the good growth prospects in Norway and estimates that a neutral policy rate will hover around two percent. However, a concern he cited is slower growth in key trading partners – such as the EU – could put a dent in Norwegian exports and negatively impact GDP.

Despite fundamental headwinds, Norway’s economy has been outperforming relative to economists’ expectations since early January and has displayed remarkable resilience. Some of these themes include fears over trade wars and a general deceleration in major world economies e.g. China, Europe and the US. This was somewhat surprising given that Norway’s economy is so reliant on the petroleum sector as the “growth engine for the Norwegian economy”.

As a sentiment-linked commodity, changes in global demand are frequently reflected in shifts in crude oil prices that are then often mirrored in the performance of Norwegian assets like the Krone and the OBX. This might explain why as crude oil prices recovered, economic performance in Norway improved along with a general rise in the equity and Krona-weighted indices.

Looking ahead, signs of deteriorating or improving global economic performance will be a particularly important trend for Norwegian policymakers to watch. If the outlook is sufficiently soured, it could push the rate hike schedule back as officials re-align their monetary policy to fit the prevailing economic circumstances.

FX TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES