Norges Bank: Policy rate seen on hold at 4% with upside risk – Danske Bank

Danske Research Team expects the central bank of Norway, Norges Bank (NB) to keep its policy rate unchanged at 4% at the upcoming meeting, reflecting Middle East-related uncertainty and volatile energy prices. The bank anticipates guidance for an unchanged rate through year-end, followed by a cautious decline, but flags upside risk from global rate expectations and a possible hike if inflation stays high.

Rate on hold but hike risk remains

"In Norway, we expect Norges Bank (NB) to keep the policy rate unchanged at 4% at today's meeting, in line with market expectations."

"Due to the great uncertainty and fluctuations in financial factors related to the situation in the Middle East, we expect NB to signal an unchanged policy rate until there is more information about the development in energy prices and the consequences for inflation."

"We expect NB to emphasize that they are ready to hike the policy rate if inflation remains high or rises."

"We expect the rate path in the Monetary Policy Report to show an unchanged policy rate for the rest of the year, followed by a cautious decline in the coming years."

"The risk is on the upside, as the rate path could indicate a certain probability of a rate hike later this year, driven by an increase in global rate expectations."

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