Nordea’s Kjetil Olsen expects Norges Bank to keep its key policy rate at 4.5% next Thursday, in line with the September rate path. He notes mixed data: slightly higher core inflation and energy prices versus a stronger NOK and softer retail sales. Olsen argues communication will stay broadly unchanged and that rate cuts are unlikely before inflation clearly converges to the 2% target, which he does not foresee before 2028.
Policy rate and inflation outlook
“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.”
