As widely expected, NB left rates unchanged at today's monetary policy meeting. The statement was balanced relative to Marchs slightly dovish stance and concluded: 'The outlook and the balance of risks for the Norwegian economy do not appear to have changed substantially since the March Report. The key policy rate has therefore been kept unchanged at this meeting'. The more detailed assessment also indicated minor changes since March. As expected, the market reactions have been very muted on the announcements.
No Monetary Policy Report (MPR) - and thereby rate path - was published today. The rate path therefore still suggests a 40% probability of a rate cut, but we still interpret this as an 'insurance premium'. Based on the recent improvement in capacity utilisation and the depreciation NOK, we expect these risks to gradually abate, and expect unchanged policy rates going forward. We pencil in the first rate hike around end-2018.
To read the entire report Please click on the pdf File Below