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Norges Bank call puts rates on “higher for longer” path

Nordea expects Norges Bank to keep its policy rate near current levels for an extended period, with only a gradual decline afterward, after a 25bp hike to 4.5%.

Reported · Written up by our desk · Central Banks

Nordea’s Kjetil Olsen said Norges Bank raised its policy rate by 25 basis points to 4.5% and also lifted the policy rate path, which creates some risk of another hike over the next six months, according to an FXStreet writeup.

The same note expects mainland growth to stay around 1.0% and unemployment to edge higher. Olsen’s view, as summarized by FXStreet, is that rates will remain near current levels for longer than markets may anticipate, before easing gradually later.

FXStreet added that other central bank moves and macro catalysts are also in focus for FX traders, including the Bank of Japan raising its short-term target to 1.25% from 1.00% and the Swiss National Bank leaving its key policy rates unchanged at 0%.

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