Norges Bank implemented its announced rate path unflinchingly and hiked its key rate by 25 bps to 4.50%. Moreover, the key rate is likely to remain at these levels for some time – until autumn 2024. It did not want to exclude a further rate step either, even though it allocates little likelihood to such a step in its rate path. It sees a likelihood of first cautious rate cuts towards the end of 2024, furthermore, the rate cut cycle might be a little faster (and maybe a bit earlier) than originally projected over the following years.

In my view, EUR/NOK will from now on depend heavily on market expectations as to which central bank – ECB or Norges Bank – will cut rates first and to what extent. 

Overall, Norges Bank has proven that it is decisive in its fight against inflation, which is likely to benefit NOK over the coming months. I am, therefore, happy with my projection of the Krone continuing to appreciate moderately in 2024 and 2025.