Antje Praefcke, FX Analyst at Commerzbank, provides an analysis of the Norwegian Krone’s (NOK) outlook following Norges Bank’s decision to maintain policy rates as expected during Thursday’s policy meeting.

Praefcke expresses satisfaction with Norges Bank’s consistent monetary policy, emphasizing its commitment to price stability. In December, after raising interest rates to 4.50%, Norges Bank indicated that the policy rate would likely remain at this level until autumn but did not rule out further tightening if deemed necessary.

The central bank is keeping the option open for a potential hike in the policy rate if circumstances warrant. With inflation data for January and February available by the next meeting at the end of March, along with fresh economic data, Norges Bank can make informed decisions. If inflation continues to decline, the central bank can adjust its projections, potentially signaling the end of the interest rate cycle and considering earlier rate cuts.

Norges Bank’s steadfast commitment to price stability is viewed as a positive factor for the Norwegian Krone (NOK). While external factors such as oil prices and market risk aversion may influence NOK’s performance, the consistent monetary policy is expected to provide steady support. Praefcke maintains confidence in the forecast of an appreciating NOK.