Norges Bank is keeping the option open to hike the policy rate again if necessary. By the next meeting at the end of March, it will know the inflation data for January and February and, of course, have a whole bunch of fresh economic data at its disposal. If inflation continues to fall, Norges Bank can then revise its projections, definitively signal the end of the interest rate cycle and adjust its interest rate path if it is considering earlier rate cuts by then.

Norges Bank's consistent stance on price stability is an asset for NOK. There are certainly other factors influencing the NOK's performance in the coming weeks, such as the Oil price or risk aversion in the market, but monetary policy should provide it with steady support. I therefore continue to feel comfortable with my forecast of an appreciating NOK and think that the market is trading it too weakly against the Euro.