Norwegian Krone: Norges Bank hike supports currency – BBH

Brown Brothers Harriman’s Elias Haddad noted that the Norwegian Krone (NOK) outperformed following the Norges Bank’s hawkish decision to raise rates by 25 basis points to 4.50%. Haddad hinted at potential further hikes if inflation justifies, with probabilities of another 25-basis point increase by Q2 2027. BBH also pointed out Norway’s energy sector as a significant tailwind for the NOK, limiting upside potential against the USD.

The Norges Bank’s decision came after staying on hold for the previous two meetings, signaling readiness to raise rates further if economic conditions warrant.