Norges Bank Stands Pat, Pushes Out Hike, NOK Lower

In what was thought to be a close call the Norwegian central bank left rates unchanged at 1.75%. In its guidance it makes it seem like it was not that close of a call after all, noting that some industries are still contracting and revised up its forecast for unemployment for next year (3.75% vs 3.5%).It also noted that underlying inflation was slowing in line with expectations, but may be somewhat lower than expected, as capacity utilization is lower. At the same it said the NOK was a bit stronger than expected.

This all gives a softish tint to the stand pat stance. It says that rates will rise by later than previously anticipated.

The krone has weakened in response. The euro has previously dipped slightly below the NOK8.0 level but has since bounced nearly 0.5% to NOK8.04. Resistance extends toward NOK8.06 and with oil prices off by nearly 2%, NOK bulls may be in no hurry to make a big stand. For its part the dollar has moved above NOK6.0. Although the dollar has done this 4 other times this year, it has not managed to finish the session above that threshold. This time might be different.