Norges Bank holds fire again in November

Norges Bank’s hold meets market expectations: At its meeting on 6 November, Norges Bank kept the policy rate at 4.50%. The decision was unanimous and had been priced in by markets.

Inflation remains above target: Norges Bank held as inflation remains above its 2.0% target, despite easing and even undershooting the Bank’s projections in September. Moreover, the Bank anticipates that the depreciation of the Norwegian krone in recent years will push up business operating costs and therefore inflation too. Accordingly, the Bank deemed restrictive monetary policy necessary to guide inflation back to its target.

100 basis points of cuts in 2025: The Central Bank said that the policy rate will be kept at 4.50% until the end of 2024. With regard to 2025, the Bank will not update its projections for the policy rate until its next meeting on 18 December; in its last forecast in September, it suggested that a gradual easing cycle will begin in Q1 2025. Our panelists see, on average, 100 basis points worth of cuts in 2025.

Panelist insight: Goldman Sachs analysts said: “Given broadly unchanged guidance and the focus on continued krone weakness, we now expect the first cut in January (vs December previously), as we see slightly dovish implications from increased trade policy uncertainty in Norway and expect the December forecast round to be a natural point for the guidance to change.”

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