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21 Apr 2015
Norges Bank maintaining an easing bias – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, notes that the firmed NOK, and softer than expected March CPI inflation argues in favour of a spring rate cut by the Norges Bank.
Key Quotes
“The Norges Bank is another central bank that has recently surprised the market by keeping interest rate steady. On March 19 policy was kept on hold although the central bank has made is very clear that another move is in the pipeline.”
“On April 14, Norges Bank Governor Olsen stated that “if things go exactly on from March as we saw then, you can foresee a further reduction in May or June”.”
“The Norwegian economy has been hard hit by the plunge in oil prices. Statoil has reportedly cut 1950 jobs (some of which will have been overseas) and another 2,000 are considered to be at risk.”
“Although the official unemployment rate is low by international standards at just 3.0%, the Norges Bank has warned that this can be expected to gradually pick up in response to the lay-offs in the petroleum industry. Last month the Norges Bank forecast that surveyed unemployment will average 4% through to 2017 and, with petroleum investment forecast to contract by 15% in 2015 and another 10% in 2016, mandated economic growth is forecast to slow to 1.5% in 2015 from 2.3% in 2014.”
“Although the strength of the housing market and the heightened levels of household debt could also be a constraint to further easing in Norway, the moderately firmer tone on the NOK this year and softer than expected March CPI inflation data argue in favour of a spring policy move. The next Norges Bank meeting is scheduled for May 7.”
Key Quotes
“The Norges Bank is another central bank that has recently surprised the market by keeping interest rate steady. On March 19 policy was kept on hold although the central bank has made is very clear that another move is in the pipeline.”
“On April 14, Norges Bank Governor Olsen stated that “if things go exactly on from March as we saw then, you can foresee a further reduction in May or June”.”
“The Norwegian economy has been hard hit by the plunge in oil prices. Statoil has reportedly cut 1950 jobs (some of which will have been overseas) and another 2,000 are considered to be at risk.”
“Although the official unemployment rate is low by international standards at just 3.0%, the Norges Bank has warned that this can be expected to gradually pick up in response to the lay-offs in the petroleum industry. Last month the Norges Bank forecast that surveyed unemployment will average 4% through to 2017 and, with petroleum investment forecast to contract by 15% in 2015 and another 10% in 2016, mandated economic growth is forecast to slow to 1.5% in 2015 from 2.3% in 2014.”
“Although the strength of the housing market and the heightened levels of household debt could also be a constraint to further easing in Norway, the moderately firmer tone on the NOK this year and softer than expected March CPI inflation data argue in favour of a spring policy move. The next Norges Bank meeting is scheduled for May 7.”