Shortly after Norges Bank chose to keep interest rates at 4.5 per cent at Thursday’s rate meeting, the krone strengthened a few cents against central currencies.
Photo: Berit Roald / NTBPublished:
Yesterday 10:05
Updated yesterday 11:43
Now one euro costs NOK 11.35, while one dollar trades for NOK 10.42, according to the data supplier Infront.
In comparison, one euro was traded for around NOK 11.38 shortly before today’s interest rate meeting, while one dollar cost NOK 10.44.
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Norges Bank writes that the krone exchange rate is now stronger than previously assumed.
– Since our interest rate meeting in December, the krone has strengthened again, and more than we expected, says central bank governor Ida Wolden Bache.
At the same time, the central bank points out that the weakening of the krone throughout last year, together with high wage growth, will probably slow down the decline in price inflation.
“If the cost growth in companies stays up, or the krone weakens again, price growth may remain high for longer than previously estimated. Then the committee is prepared to raise the interest rate again.”, says the press release from the bank.
– I think they want ice cream in their stomachs
The krone exchange rate is central when Norges Bank assesses the interest rate level.
– If the krone weakens again, Norges Bank cannot rule out another interest rate jump. They are trying to keep interest rates and the krone exchange rate up, and avoid speculation about imminent interest rate cuts, says Elisabeth Holvik, chief economist at Sparebank 1 Gruppen to E24.
She does not think we will see an interest rate cut until the autumn.
– I think they want ice in their stomachs, and see that inflation comes down and the krone stabilises. There is a great risk associated with allowing the krone exchange rate to become weaker than the levels we are at now, says Holvik.