Following the rather hawkish European Central Bank (ECB) meeting, EUR/NOK breached the 10 mark. But as Norges Bank is sticking to its rate hike cycle, economists at Commerzbank expect the pair to drop back below 10.

Further rate hikes can continue in Norway

“Even though the ECB hiked its key rate by 75 bps, while also signalling further rate steps, Norges Bank has been maintaining its restrictive approach in a much more determined manner and for longer. Moreover, Norway is likely to be less affected by slowing growth caused by its tight connections with the eurozone thanks to its role as an important energy supplier for Europe, as a result, further rate hikes can continue.”

“With a view of the higher resilience of the Norwegian economy as regards energy shortages, which will allow Norges Bank to take a tougher approach over the coming quarters than the ECB, EUR/NOK should ease below the 10 mark again.”