USD/NOK settles above 28 1/2-month low, posts weekly gain

The USD/NOK currency pair settled above recent low of 9.8548, its weakest level since January 30th 2023, in the wake of Norges Bank’s and the Federal Reserve’s policy decisions.

Norges Bank lowered its key policy rate by 25 basis points to 4.25% at its June meeting, confounding market consensus of a hold.

The central bank has kept borrowing costs at a 15-year high of 4.50% since December 2023.

Norges Bank said it might deliver more rate cuts by the end of this year, in case the economy developed as expected.

Yet, it cautioned that heightened uncertainty prevented it from committing to a particular rate path.

In the meantime, the Fed kept its federal funds rate target range without change at 4.25%-4.50% at its June meeting, in line with market consensus.

Fed policy makers have taken a cautious stance to fully evaluate the economic impact of the Trump administration’s policies concerning tariffs, immigration and taxation.

The central bank highlighted that uncertainty over the economic outlook had diminished, but was still elevated.

The Federal Reserve still projects two interest rate cuts this year, despite slowing growth and persistent inflation pressures.

The US central bank revised down its 2025 GDP growth forecast to 1.4% from 1.7% in the March projection. And, the 2026 forecast was revised down to 1.6% from 1.8% previously.

Additionally, annual core PCE inflation forecasts were revised up, as follows:

– for 2025 – to 3.0% from 2.7%;
– for 2026 – to 2.4% from 2.2%;
– for 2027 – to 2.1% from 2.0%.

The USD/NOK currency pair settled 0.63% higher at 10.0963 on Friday.

The exotic Forex pair gained 2.14% for the week.