Norwegian Krone: Policy hold guidance in focus – Nomura
Nomura’s Josie Anderson, George Buckley and Andrzej Szczepaniak expect Norges Bank to keep its policy rate at 4.25% at the August meeting, citing softer underlying inflation and benign domestic data.
Norwegian central bank Norges Bank is expected to maintain its policy rate at 4.25% during the upcoming August meeting, according to analysts Josie Anderson, George Buckley and Andrzej Szczepaniak from Nomura. This expectation is based on softer underlying inflation and positive domestic data. The key concern is the future guidance on potential rate hikes throughout the year, with a decrease in probability of additional tightening if CPI-ATE falls below expectations.
However, no rate cuts are anticipated. Inflation unexpectedly decelerated in June and July, reaching 2.7% and remaining steady, respectively, influencing the decision to leave the rate unchanged. The June minutes indicated a concern among some members about the adequacy of the policy stance, leading to a forward shift in the expected rate hike to August.
However, the recent softer inflation data now suggest that an August hike is unlikely. The confirmation of the unchanged rate at the August meeting could signal a reduced likelihood of a second rate hike this year, although uncertainty remains high.
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