Norges Bank: Key Policy Rate 0.50% (prev. 0.25%; expectations were 90% for a 25bp hike, 10% unchanged) – Unanimous

• In the Committee’s assessment, the objective of stabilising inflation around the target somewhat further out suggests that the policy rate should be raised towards a more normal level.


• In addition, the new virus variant, Omicron, is generating considerable uncertainty. Together with long delivery times and sharply rising prices for many goods, this is expected to curb GDP growth in the coming quarters.


• Repo Path: Dec’21 0.29% (prev. 0.28%); Mar’22 0.51% (prev. 0.57%), Jun’22 0.70% (prev. 0.78%), Sep’22 0.92% (prev. 0.98%), Dec’22 1.11% (prev. 1.12%).


• The krone has weakened and is now weaker than projected in September. (prev. “Looking ahead, higher economic activity and rising wage growth will likely lift underlying inflation, but the recent krone appreciation could curb the rise in prices.”)


• Countercyclical capital buffer raised to 2.00%; will be lifted to 2.50% in H1-2022, effective from one-year later.

Via Norges

Reaction details (09:13)

Just before the announcement EUR/NOK moved marginally higher to around 10.22; on release, where the 25bp hike was delivered as previously guided but by no means a certainty given Omicron, EUR/NOK fell to 10.1600. 

Analysis details (09:13)

• Note, the adjustments in the first half of the 2022 repo path are likely technical only, as they reflect the rate three-months retrospectively. However, it is currently unclear as to why the September and December 2022 points have been trimmed slightly - as such we now look to the press conference at 09:30GMT for indications whether this is also technical or should be deemed as a dovish tweak.  

16 Dec 2021 - 09:00- ForexData- Source: Norges