The Norwegian central bank, earlier in 2016, cut its key interest rate to record low of 0.5% amidst current indications of weak activity in economy. Intentions to invest in Norway have been lowered sharply and are not expected to significantly improve in spite of expected rebound in oil prices. This implies that the economic growth of Norway might be sluggish for a longer period of time.
The Norges Bank has continued to keep its dovish view. Also the central bank Governor Olsen implied recently that the central bank is expected to lower the interest rate further later in 2016. Even if the oil prices rallied recently and has eased the near-term pressure on the Norges Bank to loosen policy, a stronger rebound in oil prices is unlikely to take place until the second half of 2016, noted Lloyds Bank in a research note.
“While the NOK should recover later this year, the currency is likely to remain weak in the near term. We forecast EUR/NOK ending 2016 at 9.0”, added Lloyds Bank.
The material has been provided by InstaForex Company – www.instaforex.com