By Ashley Smith – Norwegian central bank will meet tomorrow, May 5th, to decide whether to raise interest rates to 2.00% or leave them on hold at 1.75%. Investors are split regarding the prospects of either scenario. While many economists predict the bank will indeed raise interest rates, others are concerned as to the recent negative economic data coming from Norway as well as the general strengthening of the currency versus the EUR which was pushed lower due to the Greek debt crisis.
The Krone gained 5% against the EUR this year as concerns about the Euro-Zone recovery intensified with the onset of the Greek debt crisis pushed down the EUR. The concern is that an interest rate increase which is likely to fuel additional NOK rallies will suppress the country’s economic rebound.
Investors should keep a close eye on the policy meeting tomorrow as even if the interest rates remain unchanged, the accompanying statement will likely provide clues as to the future of the rate hikes as well as an outlook on the economy.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.