Still waiting to even get started

The Norges Bank has maintained the deposit rate at 4.50% once again, in line with our expectations and economist consensus.

The policy statement also contained little by way of surprises on this occasion too, retaining language from March that points to easing at some point later in 2025. The FX reaction was suitably muted for a decision that offered minimal new guidance for markets.

After a brief but temporary uptick, EURNOK is now trading unchanged relative to pre-announcement levels.

Arguably, today’s decision can be summarized in one line from the policy statement. Namely, “There is uncertainty about future economic developments, but the Committee’s current assessment of the outlook implies that the policy rate will most likely be reduced in the course of 2025”. Granted, there have been offsetting developments since the March policy meeting. But today’s messaging largely reflects the consensus analyst view – that while the uncertainty facing rate-setters might have broadened, the direction of travel and balance of risks remains largely unchanged.

All told then, this was another wait-and-see policy decision, one that leaves both the krone and market easing expectations trading in limbo.

Admittedly, swaps imply a 46% chance of a June cut, and that looks a little too aggressive to us. But tomorrow’s CPI release will likely be more informative than today’s decision on this point – absent a sharp fall in underlying inflation, we see minimal risk of a rate cut before the second half of the year, a dynamic that should prove somewhat more krone supportive.

Author: 

Nick Rees, Head of Macro Research

Disclaimer

This information has been prepared by Monex Europe Holdings Limited, part of Monex S.A.P.I. de C.V. (“Monex”). The material is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is, or should be considered to be, financial, investment or other advice on which reliance should be placed. No representation or warranty is given as to the accuracy or completeness of this information. All entities in the “Monex” group of companies are regulated for different products and services within the jurisdictions in which they operate. Details of the different entities can be found here. Details of the respective entities’ regulated status and available products and services can then be found on the relevant links to the individual jurisdictions’ website.