Norges Bank is set to raise the policy rate by 50 basis points to 1.75% on Wednesday. Economists at Commerzbank expect the Norwegian krone to strengthen against the euro on a restrictive central bank.

How restrictive is Norges Bank?

“If the Norges Bank sounds restrictive and signals another juicy move for September, the NOK should be able to appreciate against the euro. After all, it is becoming increasingly clear that the Norges Bank is taking a firm stance against inflation, while the ECB is acting hesitantly, which is weighing on the euro.” 

“The more active central bank is Norges Bank, and the market should reward that with NOK strength, notwithstanding possible phases of increased risk aversion.”