Mar 14, 2013
Forex Flash: Norges Bank with less urgency to raise rates – TD Securities
Despite the unchanged policy, rates on hold at 1.50%, the Norges Bank statement explaining the details behind the decision had a much more dovish interpretation than what TD Securities analysts had been expecting. “The Norges Bank seems to have made some significant changes to its inflation models, and slashed its projections from 2014 onwards, with CPI now sitting at only 2.1% at the end of 2016, still below the Norges Bank’s 2.5% target”, wrote analyst Cristian Maggio. “And along the same lines, the Norges Bank also slashed its policy rate projections, actually incorporating some risk of a rate cut in mid-2013, and the first rate hike was pushed back by about a year to H1 2014”, he added, suspecting that this move in the policy rate forecasts was as much about lower inflation as it was about the fact that the Norges Bank gets new macroprudential tools this year, “so there is less urgency to raise rates as the Norges Bank now has better ways to deal with the credit cycle”.