Further recovery to be difficult for NOK until inflation data next week – Commerzbank
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Norges Bank announced a 25 bps hike on Thursday, sending the sight deposit rate to 2.50%. The market seemed disappointed and the Norwegian krone eased in its initial reaction. Economists at Commerzbank expect NOK to remain under pressure until inflation data next week.
“Norges Bank expects that the rate of inflation will ease in the future. Moreover, there are signs that the economy is slowly cooling. Also, Norges Bank’s past rate hikes should increasingly be felt.”
“Whether things will work out as projected in the end will have to be seen. The uncertainty on that front remains high, as Norges Bank itself admits. For that reason, the market is likely to wonder whether Norges Bank has not reduced the speed of the rate hikes too early.”
“The market is likely to be keenly interested in the publication of the inflation data for October next week and in signs that inflation really might have peaked. Until then the market might remain sceptical though so that further recovery is likely to be difficult for NOK.”
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