Norges Bank: Rate Path Expected to Remain Unchanged – Nordea

Rate cuts remain unlikely until inflation clearly converges towards the 2% target, according to Nordea’s Kjetil Olsen, who does not expect that convergence before 2028. For next Thursday, he forecasts Norges Bank will leave its key policy rate at 4.5%, consistent with the September rate path, while keeping its communication largely unchanged. The data offer a mixed picture, he notes: core inflation and energy prices are slightly higher, but the NOK has strengthened and retail sales have weakened.

What lies ahead for the policy rate and inflation?

"Norges Bank will keep its key rate unchanged at 4.5% next Thursday, in line with the rate path presented at the September meeting."

"In addition, oil and gas prices have risen, as have electricity futures."

"On the other hand, the stronger NOK points in the opposite direction."

"Overall, if Norges Bank were to publish a new rate path today, we believe it would be very close to the September path at the front end, perhaps marginally lower, but somewhat lower further out."

"We believe Norges Bank needs to see clear evidence that inflation is converging towards the 2% target before signalling rate cuts."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)