Norwegian Krone Rallies on Norges Bank's Promise of Another Hike

Above: File image of Ida Wolden Bache. Sourced: Norges Bank.

The Norwegian Krone rallied against the Pound and other major currencies after Norges Bank raised interest rates by 25 basis points and committed to a further hike before the year is done.

The commitment to that further hike is crucial from a currency market perspective as it keeps expectations for rate cuts in 2024 at bay, something the U.S. Federal Reserve was also able to engineer in its midweek decision.

By contrast, as we have already seen today, the Swiss Franc is under pressure because the SNB failed to convince it would hike again.

It also backs Pound Sterling Live's view that for the Bank of England to support the Pound on Thursday the Bank must signal another hike before year-end is highly likely.

"Whether additional tightening will be needed depends on economic developments. There will likely be one additional policy rate hike, most probably in December", said Governor Ida Wolden Bache in a statement.

Furthermore, the Norges Bank was quick to point out inflation remained a problem, opting to avoid waving a victory flag on the matter.

It is such guidance that tends to result in a softer currency outcome.

The Pound to Krone exchange rate was 0.40% lower at the time of writing at 13.2632, the Euro to Krone was down 0.10% at 11.4897, the Dollar to Krone was at 0.10% lower at 10.7783.