Norges Bank ultimately did what was perceived reasonable by the markets. It maintained its position that the key interest rate will not be lowered until next year, Commerzbank’s FX analyst Antje Praefcke notes.

Weak krone remains a concern for Norges Bank

“Although inflation has fallen somewhat more strongly than expected, the weak krone remains a concern for Norges Bank, which is why it does not want to lower the key rate prematurely.”

“Norges Bank removed the reference to possible interest rate hikes from the statement. “We believe that there is a need to keep the policy rate at today’s level for a period ahead but that the time to ease monetary policy is approaching,” said the central bank’s Governor.”

“In short, Norges Bank is still restrictive as it continues to see risks to inflation. However, it is preparing the rate cut cycle by no longer citing the possibility of a rate increase. The market is likely to view the prospect of a rising real interest rate positively, which is why the krone was able to appreciate moderately even after the decision.”