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- The Norwegian Central Bank kept interest rates steady at 4.5%, as expected.
- The bank is postponing easing until the first quarter of 2025.
- As long as the National Reserve Bank’s policy diverges from its peers, the Norwegian Krone could rise further.
On Friday, USD/NOK rebounded towards 10.575 and erased most of Thursday’s losses. However, the Norwegian krone is holding strongly against its peers, with the Norwegian central bank likely to begin easing policy in the first quarter of 2025.
Norway’s central bank announced on Thursday that it would keep interest rates at 4.5%, a decision that was widely expected. The move is considered hawkish as the bank has postponed its initial rate cut forecast to the first quarter of 2025, which was previously set for the third quarter of 2024. According to the new forecast, the interest rate will remain at 4.50% until the end of the year. year and then begins to decrease gradually. This contrasts with the more aggressive interest rate cutting strategies of neighboring central banks, which are grappling with different economic challenges.
Regarding Economic forecastsNorway’s central bank has expressed concerns that cutting interest rates too early could lead to long-term inflation above the target level despite recent economic challenges. As a result, market expectations of a rate cut over the next six months have all but faded, with nearly 50 basis points of easing expected over the next half year, causing the krone to appreciate against its peers.
Technical analysis of the USD/NOK pair
According to the daily ScheduleThe future outlook for the pair remains bearish, with indicators showing bearish signs. The Relative Strength Index (RSI) stands below the 50 level while the Moving Average Convergence Divergence (MACD) prints flat red bars.
The most obvious bearish sign is that the pair recently fell below its 20,100 and 200-day SMAs, losing more than 1% in the past four sessions.
