Norges Bank: Policy rate seen elevated for longer – Nordea

Nordea’s Kjetil Olsen notes that Norges Bank raised its policy rate by 25bp to 4.5% and lifted the policy rate path, implying some risk of a further hike over the next six months. Norges Bank expects mainland growth to remain around 1% and unemployment to edge higher, while Olsen sees rates staying near current levels for an extended period and only declining gradually thereafter.

Central bank signals prolonged tight stance

"Norges Bank raised its policy rate by 25bps to 4.5% as we expected and signals a 40% chance of another hike over the next half year."

"They do not forecast rate cuts before 2028."

"Norges Bank expects growth to be around 1% going forward, slightly below potential, and that unemploment will edge up."

"They do not think the inflation outlook has changed much since June despite inflation having been lower during summer and NOK is somewhat stronger, pointing to stronger external impulses (energy, commodity prices)."

"Rates will stay around current levels for quite some time and when rates eventually goes down, they will not go down by much."

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