Norway’s central bank, Norges Bank, has signaled a hawkish shift in its monetary policy, indicating that higher interest rates are likely soon in order to bring inflation back to target, even if this comes at the expense of weaker economic growth [1]. The policy rate was held steady at 4%, and the bank stated that 'it will likely be appropriate to raise the policy rate at one of the forthcoming monetary policy meetings.' This marks a departure from previous projections, which had anticipated at least one rate cut this year; now, the bank projects at least one hike [1].
Norges Bank emphasized that inflation has remained above target for several years and warned of prospects for higher inflation ahead than previously projected. This outlook could prompt firms and households to plan for greater inflation persistence, with the central bank willing to sacrifice growth to achieve its inflation target [1].
The hawkish stance and a 225 basis point carry advantage in favor of Norway have had immediate market effects. NOK/SEK reversed earlier losses and moved back above 0.97, with the March high situated at 0.9851 [1]. Meanwhile, EUR/NOK briefly slipped below the lower boundary of its multiyear range near 11.08, forming an interim trough around 10.92, before rebounding sharply toward the 50‑DMA, located near 11.30/11.35, which represents an important resistance zone [1].
Societe Generale analysts note that for EUR/NOK to confirm a reduction in downward momentum, it will need to hold above 10.92 and develop a more durable base. A break above 11.30/11.35 would be crucial to highlight a broader recovery [1].
CONCLUSION
Norges Bank’s hawkish policy signals and willingness to raise rates have strengthened the Norwegian krone, reversing recent losses against the Swedish krona and causing notable moves in EUR/NOK. The market is now watching key resistance levels for further confirmation of momentum shifts, with analysts highlighting the importance of upcoming monetary policy meetings.