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13 Mar 2015
Norges Bank to cut rates by 25 bp next week – TDS
FXStreet (Edinburgh) - Strategists at TD Securities see the Nordic central bank lowering its benchmark rate by 25 bp in the next meeting on March 19th.
Key Quotes
“We’re in line with consensus in looking for another 25bps rate cut from the Norges Bank down to 1.00%, but this is less of a sure thing than we would have thought a month or two ago, as the economic data hasn’t shown as much sign of cracking as we thought we’d see by now”.
“Recently markets have pulled back the amount of easing priced in for Norway, and are factoring in only about 40bps of cuts over the next year”.
“The key for market reaction will lie in the new policy rate projections. We suspect they will show a bias of about 5bps of easing and a message that hurdles must be met to cut further (weaker data, lower oil, stronger currency) rather than a message that things must go right to avoid a cut”.
“We would even see higher risks of a flat repo rate profile than a more aggressive 10-15bps of cuts forecast. So overall, we are wary of a hawkish surprise here and see poor risk-reward on the day”.
Key Quotes
“We’re in line with consensus in looking for another 25bps rate cut from the Norges Bank down to 1.00%, but this is less of a sure thing than we would have thought a month or two ago, as the economic data hasn’t shown as much sign of cracking as we thought we’d see by now”.
“Recently markets have pulled back the amount of easing priced in for Norway, and are factoring in only about 40bps of cuts over the next year”.
“The key for market reaction will lie in the new policy rate projections. We suspect they will show a bias of about 5bps of easing and a message that hurdles must be met to cut further (weaker data, lower oil, stronger currency) rather than a message that things must go right to avoid a cut”.
“We would even see higher risks of a flat repo rate profile than a more aggressive 10-15bps of cuts forecast. So overall, we are wary of a hawkish surprise here and see poor risk-reward on the day”.