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10 Dec 2014
NOK could suffer on a rate cut – Rabobank
FXStreet (Barcelona) - Jane Foley, Senior Currency Strategist at Rabobank, notes that Norges bank may set the path for a rate cut in its meet tomorrow due to the risk surround Norway’s growth, which may lead NOK to suffer further.
Key Quotes
“Looking forward to next year, the NOK could suffer further on the back of a potential rate cut from the Norges Bank. The market consensus strongly favours steady policy from the Norges Bank at tomorrow’s policy meeting. However, in view of the risks to growth the chances that the Norges Bank will set the scene for further rate cuts has grown.”
“At the last policy meeting in October, the Norges Bank warned that developments abroad and the fall in oil prices had increased the uncertainty regarding the outlook for the Norwegian economy.”
“The continuation of sluggish growth in the Eurozone combined, the increased pressure on the oil price combined with the moderation in core inflation suggests scope for a reduction in the 1.5% policy rate potentially as soon as the March Norges Bank meeting.”
“We have maintained a more bearish forecast than the market for NOK vs. EUR all year. However, on the back of rate cut risk, slower growth and weaker oil prices we have revised up our EUR/NOK forecast further and see risk of a move to EUR/NOK 9.00 on a 3 mth view.”
Key Quotes
“Looking forward to next year, the NOK could suffer further on the back of a potential rate cut from the Norges Bank. The market consensus strongly favours steady policy from the Norges Bank at tomorrow’s policy meeting. However, in view of the risks to growth the chances that the Norges Bank will set the scene for further rate cuts has grown.”
“At the last policy meeting in October, the Norges Bank warned that developments abroad and the fall in oil prices had increased the uncertainty regarding the outlook for the Norwegian economy.”
“The continuation of sluggish growth in the Eurozone combined, the increased pressure on the oil price combined with the moderation in core inflation suggests scope for a reduction in the 1.5% policy rate potentially as soon as the March Norges Bank meeting.”
“We have maintained a more bearish forecast than the market for NOK vs. EUR all year. However, on the back of rate cut risk, slower growth and weaker oil prices we have revised up our EUR/NOK forecast further and see risk of a move to EUR/NOK 9.00 on a 3 mth view.”