18 Jun 2015
Norges Bank could cut rates further in the medium term – TDS
FXStreet (Edinburgh) - Strategist Jacqui Douglas at TD Securities assessed the outcome of today’s Norges Bank meeting.
Key Quotes
“Norges Bank delivered 25bps rate cut that was nearly unanimously expected”.
“The door was left open for another 25bps rate cut sometime over the next year, as uncertainty remains high around the potential for a lagged impact from the drop in oil prices”.
“Going forward, Governor Olsen says that, “the key policy rate may be reduced further in the course of autumn.” The big question would then be if the NB actually follows through with a rate cut or just keeps the threat in place while it waits to assess how much negative pass-through Norway sees from the earlier drop in oil prices”.
“However, when the NB forecasts such a strong probability of a rate move it does tend to follow through, so given that, we’re changing our view and pencilling in another rate cut for September, although this decision will still be data dependent”.
“The fact that the government has recently introduced further macroprudential measures to contain household lending is probably helping the central bank to feel a bit more comfortable in pushing rates down to new lows, something that probably should have been done some time ago”.
Key Quotes
“Norges Bank delivered 25bps rate cut that was nearly unanimously expected”.
“The door was left open for another 25bps rate cut sometime over the next year, as uncertainty remains high around the potential for a lagged impact from the drop in oil prices”.
“Going forward, Governor Olsen says that, “the key policy rate may be reduced further in the course of autumn.” The big question would then be if the NB actually follows through with a rate cut or just keeps the threat in place while it waits to assess how much negative pass-through Norway sees from the earlier drop in oil prices”.
“However, when the NB forecasts such a strong probability of a rate move it does tend to follow through, so given that, we’re changing our view and pencilling in another rate cut for September, although this decision will still be data dependent”.
“The fact that the government has recently introduced further macroprudential measures to contain household lending is probably helping the central bank to feel a bit more comfortable in pushing rates down to new lows, something that probably should have been done some time ago”.