Hawkish Norway sends crown soaring as more rate hikes seen
By Saikat Chatterjee
LONDON, June 20 (Reuters) - Norway's crown jumped against the dollar and the euro on Thursday after the central bank raised interest rates as expected and signalled a faster pace of rate hikes in the coming months.
Bucking a global trend of central banks from the U.S. Federal Reserve to the European Central Bank hinting at more policy stimulus this week, the Norwegian central bank maintained plans to hike again in the second half of the year thanks to domestic economic strength.
"Probably the biggest news is that the central bank thinks it will 'most likely' hike again over the course of 2019, having previously seen the next move around the first quarter of 2020," ING economists said in a note.
"This latter point means these new set of forecasts are perhaps marginally more hawkish than expected," they said.
The decision by the central bank sent the crown NOK=D3 soaring 1.7% to its highest level against the dollar in two months at 8.57 crowns.
It was the crown's biggest single-day rise against the dollar since September 2016.
Against the euro EURNOK=D3, the crown jumped 1% to 9.68 crowns per euro, a 1-1/2 month high.
Norway's main stock index .OBXwas up by a third of a percent as the Norwegian crown strengthened.
The bank raised its key policy rate to 1.25% from 1.0%previously, in line with the forecast of 27 out of 29 economists in a Reuters poll.
(Reporting by Saikat Chatterjee; Additional reporting by Helen Reid; Editing by Kevin Liffey)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.