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NORGES BANK: NOK Little Changed After Wolden-Bache Provides Few Policy Signals

NORGES BANK
Central Bank NewsCEEMEANorges BankBulletNorwayGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

NOK is little changed against the G10 this morning, with Governor Wolden-Bache’s speech at the Peterson Institute last night providing few new policy signals. Wolden-Bache’s speech – which we covered in real-time last night - did not suggest a dovish pivot is on the cards at the November 7 decision.

  • The Governor discussed the trade-offs faced between high sensitivity of monetary policy on aggregate demand in Norway and the persistent weakness of the exchange rate.
  • Overall, the speech appears consistent with Norges Bank remaining on hold until Q1 2025 (in line with the September MPR rate path) on the back of exchange rate concerns.
  • However, Norges Bank are clearly cognizant of the negative impact its tight policy has on household consumption, potentially setting the stage for a swift pace of easing once the first cut is delivered.
  • As such, current market pricing for 5x25bp cuts by the end of 2025 appears reasonable at this stage (pricing according to estimates from SEB).
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NOK is little changed against the G10 this morning, with Governor Wolden-Bache’s speech at the Peterson Institute last night providing few new policy signals. Wolden-Bache’s speech – which we covered in real-time last night - did not suggest a dovish pivot is on the cards at the November 7 decision.

  • The Governor discussed the trade-offs faced between high sensitivity of monetary policy on aggregate demand in Norway and the persistent weakness of the exchange rate.
  • Overall, the speech appears consistent with Norges Bank remaining on hold until Q1 2025 (in line with the September MPR rate path) on the back of exchange rate concerns.
  • However, Norges Bank are clearly cognizant of the negative impact its tight policy has on household consumption, potentially setting the stage for a swift pace of easing once the first cut is delivered.
  • As such, current market pricing for 5x25bp cuts by the end of 2025 appears reasonable at this stage (pricing according to estimates from SEB).