11 Jun 2015
Norges Bank meeting: a close call? – Rabobank
FXStreet (Edinburgh) - Senior Currency Strategist at Rabobank Jane Foley has slipped the possibility that the Norges Bank could leave rates unchanged next week.
Key Quotes
“Yesterday’s stronger than expected release of Norwegian underlying CPI inflation at 2.4% y/y has undermined market speculation that the Norges Bank is on course for a rate cut next week”.
“Last month the Norges Bank stated that “the risk of a pronounced downturn in the Norwegian economy appears to have diminished somewhat”.
“The fact that oil prices have recovered from their lows will offer some respite to Norway’s substantial oil sector”.
“Also, as is the case in many other economies, the strength of the housing market and the associated climb in levels of household debt as a ratio of disposable income is of concern to the central bank”.
“That said, with domestic demand having clearly weakened this year, the prospects of further easing remains strong”.
“May manufacturing PMI dropped to 46.6 (the lowest level since June 2013) and wage growth has been slow. Steady rates next week would likely result in a sharp drop in EUR/NOK towards 8.40”.
Key Quotes
“Yesterday’s stronger than expected release of Norwegian underlying CPI inflation at 2.4% y/y has undermined market speculation that the Norges Bank is on course for a rate cut next week”.
“Last month the Norges Bank stated that “the risk of a pronounced downturn in the Norwegian economy appears to have diminished somewhat”.
“The fact that oil prices have recovered from their lows will offer some respite to Norway’s substantial oil sector”.
“Also, as is the case in many other economies, the strength of the housing market and the associated climb in levels of household debt as a ratio of disposable income is of concern to the central bank”.
“That said, with domestic demand having clearly weakened this year, the prospects of further easing remains strong”.
“May manufacturing PMI dropped to 46.6 (the lowest level since June 2013) and wage growth has been slow. Steady rates next week would likely result in a sharp drop in EUR/NOK towards 8.40”.