Norges Bank has over the past year acknowledged that the strong NOK is reflecting the country’s superb fiscal and economic position rather than expectations of Norway being the odd man out hiking rates alone. Considering that rate expectations have declined since then, the bank can hardly argue the NOK has overshot the forecast by ~1% due to monetary policy expectations. Also worth noting, Norges Bank expects the NOK to appreciate slightly in the coming year and then remain at levels stronger than the current I44 spot rate. From these considerations, a rate cut next week to try and weaken the currency is highly unlikely. According to a survey, the domestic investor universe agrees; the NOK needs to strengthen an additional 5-6% to trigger a rate cut.
Click here to read the full report: NOK
SEB