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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”.

Forex Flash: German prepares for EU “horse trading” summit - BTMU

Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ notes that Germany pushed forward a vote on its budget which will result in Germany reaching a balanced budget one year earlier than required.
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European leaders loosen noose on embattled Southern European countries

European leaders are embarking off a previous hardline stance, in essence loosening the economic shackles once demanded by Germany as the recession lingers and unemployment mounts across southern Europe. In an effort to relinquish the debt crisis – without a doubt the euro area’s biggest headache – European leaders will look to find common ground to foster a joint resolution that will improve the plights of several indebted countries and their constituent populations.
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