VIEW: Svenska HB: Delivering A Blow

In the wake of today’s Norges Bank decision Svenska Handelsbanken write “on one hand, we could say that the rate path is "dead on arrival," as Norges Bank has not had time to digest the soft message from Fed yesterday, which sent global rate expectations tumbling.”

• “But on the other hand, Norges Bank has yet again shown that the policy rate decision is highly dependent on the NOK exchange rate.”
• “The Committee is prepared to raise the policy rate again, if the NOK exchange rate turns out weaker than expected.”
• “Given the hawkish surprise today, we cannot rule out this possibility; again, on the expense of the real economy. But Norges Bank also states that if there is a more pronounced slowdown in the Norwegian economy, or inflation declines more rapidly, the policy rate may be lowered earlier than currently envisaged.”