. Everyone expects Norges Bank to raise the main interest rate. This is the interest rate that banks receive on deposits with the central bank. It is also the basis for the interest rate you receive as a bank customer.
- We believe the interest rate will be raised to 0,25 percent, says chief economist Kyrre Knudsen at Sparebank 1 SR-Bank.
When the pandemic hit the economy last year, central bank governor Øystein Olsen and the rest people setting interest rates with Norges Bank reduced the main interest rate to zero for the first time in history.
Changes in the exchange rate of the Norwegian krone
When asked whether we should expect it changes in the Norwegian krone exchange rate after Thursday's decision Norges Bank, Kyrre Knudsen suggested:
- When lowering the interest rate, they announced that they would increase in the future. However, if we are even more optimistic about the Norwegian interest rate and economy, we might see a stronger koruna.
Knudsen says the main question is how Norges Bank thinks about the prime rate, or how they envision its development in the time ahead. There is potential for a slightly higher interest rate towards the end of the period, says Knudsen.
Chief strategist Erik Bruce and senior strategist Joachim Bernhardsen at Nordea Markets believe that there are indications that Norges Bank will raise its interest rates slightly. Strategists believe the stock market will not care, and unlike Knudsen, they do not believe in strengthening the crown.
– In both the interest rate and currency markets, each interest rate adjustment is assessed. This indicates small influences on the market after change of interest rate in Norway, they write in the report.
Nordea Markets also points out that elections will be held in Germany on Sunday. This could mean that Angela Merkel's 16 years as head of state are coming to an end. Fortunately, according to the strategists, the elections will not have a market impact.
Knudsen of Sparebank 1 SR-Bank says that the monthly data on purchasing managers' indices (PMIs) from the euro area and the US, due on Thursday, will be very interesting, but there is no doubt:
"It's central bank week," Knudsen says, awaiting Norges Bank's decisions on key interest rates.
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