Ida Wolden Bache: The conduct of monetary policy

What the desk is arguing

Governor Bache's prepared remarks at the parliamentary hearing were a standard review of financial market developments, with no shift in the monetary policy stance. The statement reaffirms Norges Bank's wait-and-see approach, consistent with its March decision to hold the policy rate at 4.50%.

The absence of hawkish or dovish surprises in the testimony suggests the central bank remains comfortable with current market pricing. This supports our view that NOK will trade range-bound against EUR until clearer domestic inflation or global risk signals emerge.

Where it sits in our coverage

Our consensus target for EUR/NOK is 11.20 by end-2026, with a 12-month range of 10.85-11.55. Governor Bache's neutral commentary aligns with our baseline expectation for a protracted hold, but the lack of pushback against rate cut expectations may add modest downside risk near term.

Morgan Stanley holds an aligned view, forecasting EUR/NOK at 11.00 for Jun-26, while JPMorgan targets 11.15 for Sep-26. Danske Bank is more bearish on NOK, with a Mar-26 target of 11.50. All major house calls remain within our broad range, reinforcing our range-trading thesis.

How other firms see it

Morgan Stanley (aligned) echoes our reading of a neutral Norges Bank, seeing limited scope for NOK appreciation until energy prices rally. JPMorgan (aligned) also expects range-bound trading, citing balanced risks. In contrast, Danske Bank (contrary) argues that a more patient Norges Bank will eventually underpin NOK, targeting a stronger crown by 2027.