HALISTER1: Hawkish Norges Bank Not Trigger for ‘Massive’ NOK Gains: Danske

Hawkish Norges Bank Not Trigger for ‘Massive’ NOK Gains: Danske

(Bloomberg) -- Norges Bank policy report and press releases are on the hawkish side, although don’t expect this to be a “massive trigger” for NOK appreciation, Danske Bank analysts Arne Lohmann Rasmussen and Kristoffer Kjaer Lomholt write in e-mailed comments.
  • NOK gains should be contained because sharp appreciation would trigger Norges Bank rate cut
    • Global business cycle is vulnerable, which should contain oil price strength
    • Relative unit-labor cost developments suggest limited NOK upside potential in the short term
  • Norges Bank still “officially” has an easing bias, moving toward a neutral stance if economy develops in line with expectations
  • Norges Bank has now taken higher Nibor-policy spread into account
  • Norges Bank has balancing act: wants to maintain weak NOK while simultaneously signaling that economic fundamentals warrant unchanged rates
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
1037Z NO (Norges Bank)

People
Arne Rasmussen (Danske Bank A/S)
Kristoffer Lomholt (Danske Bank A/S)

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