Norway’s central bank kept rates unchanged but signaled reduced likelihood of further hikes, weakening the Krone.
Norges Bank left its policy rate at 4.25% for a second consecutive meeting, as expected, but softened its hawkish stance. The bank shifted its forward guidance from indicating a likely hike to a more conditional outlook, removing explicit language about tighter policy.
Previously, the bank suggested another rate increase was probable in upcoming meetings. Now, it states only that a hike “may still become necessary.” Inflation trends below projections could further diminish the case for additional tightening, though Norway’s carry appeal continues to support the Krone.
The Krone weakened following the announcement, reflecting market reaction to the less aggressive tone.