The USD/NOK currency pair rebounded from a 37-month low of 9.7045 on Tuesday ahead of the outcome of the Federal Reserve’s two-day policy meeting.
The Fed is widely expected to keep its federal funds rate target range intact at 3.50%-3.75% at its January 27th-28th meeting.
Investors will also be paying close attention to the press conference with Fed Chair Jerome Powell.
The minutes from the Fed’s December policy meeting showed that officials judged rate cuts were likely to be appropriate in 2026 in case inflation subsides over time.
Yet, policy makers were divided in their assessment of risks between higher inflation and unemployment. Some FOMC members expressed greater concern that inflation becoming entrenched could require higher interest rates. Other policy makers favored a greater magnitude of rate cuts to rein in signs of a softening labor market.
At the same time, Fed Chair Jerome Powell has not offered any guidance on the timing of the next rate cut.
The FOMC signaled just one 25 bps rate cut for this year, while investors continue to expect at least two rate cuts.
Meanwhile, Norges Bank left its key policy rate without change at 4% at its January 22nd meeting, in line with market consensus.
The central bank reaffirmed its December rate projection, pointing to one or two rate cuts this year, despite heightened geopolitical uncertainty.
USD/NOK was last up 0.46% on the day to trade at 9.7979.
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