USD/NOK gains, eyes on FOMC, Norges Bank meetings

The USD/NOK currency pair edged up on Wednesday ahead of the outcome of the Federal Reserve’s and Norges Bank’s policy meetings.

The Fed is largely expected to leave its federal funds rate target range intact at 3.50%-3.75% at its June 16th-17th meeting, following three successive rate cuts last year.

The minutes of the Federal Reserve’s April policy meeting showed that most officials judged additional policy firming would likely be warranted if inflation continued to run persistently above the 2% objective.

Policy makers broadly agreed that inflation risks were tilted to the upside and acknowledged that developments in the Middle East could significantly shift the balance of risks and complicate the appropriate policy path.

Although the US and Iran have agreed to a provisional peace deal, oil prices are still holding above pre-war levels.

Market participants will be scrutinizing the subsequent press conference for indications of how newly installed Fed Chair Kevin Warsh plans to steer the central bank in the period ahead.

They will also be paying close attention to the new set of FOMC economic forecasts.

Meanwhile, Norges Bank is expected to leave its key policy rate without change at 4.25% at its June 18th meeting.

In May, the central bank unexpectedly raised its policy rate by 25 basis points to 4.25%, as it emphasized inflation remained too high and was likely to stay elevated because of the ongoing Middle East war.

Policy makers noted that a higher policy rate was necessary to drive inflation back to target within a reasonable timeframe.

Norges Bank had said it still projected a policy rate between 4.25% and 4.50% by year-end.

The USD/NOK currency pair was last up 0.19% on the day to trade at 9.4824.