Norges Bank left its policy rate unchanged at 4.50 percent at its latest monetary policy meeting, keeping open the option of further increases. Commerzbank’s Antje Praefcke said the decision was broadly neutral for the Norwegian krone.
The central bank said its current assessment implies the policy rate will likely need to stay elevated for a time. It added that the committee is prepared to raise the rate if the inflation outlook warrants it. Inflation remains well above Norges Bank’s target, the bank itself underlines.
Market reaction and outlook
Praefcke said there were no surprises in the decision, which is why she sees little direct effect on the currency. She noted that Norges Bank could still raise its rate again before year-end if necessary.
The next monetary policy meeting is in December, when new forecasts will be presented. Commerzbank sees the Middle East conflict as the biggest potential source of surprises.
Oil and gas remain the key driver
Praefcke said oil and gas prices remain the main drivers of the krone. She expects greater volatility in the coming weeks from those commodities than from any major monetary policy surprise.
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Source: Norges Bank
