NOK flows: NOK net little changed after hawkish cut
Norges Bank cut rates, but indicated a less dovish future profile
Although Norges Bank cut the policy rate 25bps, their statement is a little more hawkish than might have been expected. They say that “Based on the Committee’s current assessment of the outlook, a somewhat higher policy rate will likely be needed ahead compared with the outlook in June. The Committee considered keeping the policy rate unchanged at this meeting but concluded that a rate cut is now appropriate.” EUR/NOK rose on the announcement, as a rate cut was not fully priced in, but has subsequently slipped back as the more hawkish tone is noted. We continue to see long term upside for the NOK, which has underperformed significantly the last year, but for now the “hawkish cut” is likely to see broad stability.
