Norges Bank Review: Stay long NOK/SEK on Nordic policy divergence - RBS

Research Team at RBS, notes that the Norges Bank left policy unchanged at its September meeting and signaled that the policy rate would likely remain at the current level in the period ahead.

Key Quotes

“This was on the hawkish side of market expectations. Contrasting with Norges Bank’s shift to a more neutral stance, we expect the Riksbank to extend QE at its upcoming October meeting as the prospects for Swedish inflation deteriorate. We thus see a period of relative monetary policy divergence in the Nordics ahead. This should be supportive of our long NOK/SEK position, which also still looks to have scope to catch up with the recent favourable move in rate spreads.”