The Norwegian Krone has weakened significantly after Fed Chairman Powell’s hawkish remarks yesterday. Economists at Nordea believe the NOK will remain under severe pressure in the short-term.

Will Norges Bank come NOK to the rescue?

“We believe the NOK will remain under severe pressure in the coming weeks and moves in EUR/NOK to 11.50 and USD/NOK to 11.15 are far from unlikely.”

“With the ECB, Riksbank, and now Fed as well expect to increase rates by 50 bps in the upcoming weeks, Norges Bank’s expected 25 bps rate hike will be overshadowed. Thus, Norges Bank would have to move back to a 50 bps rate hike as well if it wants to soften the blow for the NOK from more aggressive central banks elsewhere.”