Norges Bank maintains its Key Policy Rate at 4.50% as expected; the data so far could suggest that a tight monetary policy stance may be needed for somewhat longer than previously envisaged.

Data:

• "Since the March Report, inflation has been slightly lower than projected. On the other hand, economic activity is slightly higher than expected, and wage growth may turn out to be slightly higher than projected."


• "The policy rate will likely be at this level for some time ahead"


• "The data so far could suggest that a tight monetary policy stance may be needed for somewhat longer than previously envisaged."

FX:

• At the same time, interest rate expectations abroad have risen, and the krone is somewhat weaker than assumed.

via Norges Bank

Reaction details (09:09)

• NOK came under some modest pressure as policy settings were maintained but then appreciated slightly on the line that "the data so far could suggest that a tight monetary policy stance may be needed for somewhat longer than previously envisaged.".


• Specifically, EUR/NOK lifted from 11.7700 to 11.7860 before paring and slipping to an 11.7403 session low.

Analysis details (09:12)

• In short, the decision was as expected with the slight exception of the inclusion of language around the policy stance needing to remain tight for "somewhat longer than previously envisaged". An inclusion which potentially casts some doubt on Governor Bache's assessment in the last press conference that the path looks for the first cut in September and potentially brings the Bank more in-line with market pricing which looks for the first cut at end-2024.


• Press conference with Governor Bache from 09:30BST, from this we look for any alteration to the verbal guidance for a cut most likely occurring in September.

03 May 2024 - 09:00- Fixed IncomeData- Source: Newswires