It came as no surprise that the Norges Bank voted to cut its policy rate by 25 bps to a record low last week of 1.0%, one of the highest policy rates in Europe. The economic challenges Norway faces are rather different to its neighbours: firstly, Norway is the only net oil exporter in western Europe; secondly, its housing market has boomed after the crisis compared to the European union. With a depreciating krone, increasing consumer prices, and rising house prices, a rate cut may seem rather counter- intuitive. Norway has weathered the storm so far but with signs of an imminent slowdown in the oil industry pushing down Norway’s 2015 and 2016 GDP growth forecasts, further rate cuts are expected from September into 2016.
Tuesday, June 23, 2015
Tuesday, June 9, 2015
Volatility in bond markets has been heating up - in fact, yield fluctuations last Thursday were some of the biggest in 2015. This week’s chart shows the 1 week rolling volatility of the German 10 year Bund yield, which spiked after European Central Bank’s President Mario Draghi confirmed on 4 June that his stimulus programme is working to boost the Eurozone economy. The international Monetary Fund cut its 2015 GDP growth forecast for the US form 3.1% to 2.5% on the same day. It may be the start of the summer, but investors certainly aren’t taking it easy as they position themselves for perceived shrinking divergences in the world’s largest economies.