Norges bank to spring back toward more dovish policy rate profile - TDS

Analysts at TDS are looking for the Norges Bank to keep rates on hold at 0.50%, in line with nearly unanimous consensus.

Key Quotes

“The recent downside surprises to the inflation data bring the inflation outlook back to where it was in the spring, when the Norges Bank had a much more dovish rate outlook.”

“We look for the odds of an additional 25bps rate cut to be pushed back up above 50%, so for the rate profile to show a low of 0.30-0.35% through 2017. This will leave it somewhere between the rate projections from the June and September MPRs.”

“FX Strategy: While the Norges Bank may take on a more dovish tone, we are inclined to fade any post-meeting NOK weakness as downside support in EURNOK in the 8.9230/60 zone looks vulnerable amid resurgent oil prices.”