Norges Bank: One more hike then gradual cuts – Nomura
Nomura’s analysts see Norges Bank delivering another rate hike in November as inflation remains sticky, before a 25 bp cut next year and further reductions beyond 2027 towards 3.50%.
Nomura analysts predict the Norges Bank will raise interest rates by another 25 basis points in November as inflation remains stubborn. They anticipate a series of gradual cuts in the coming years, aiming for a final policy rate near 3.50% by 2027. The difference between Norges Bank's policy rate and the ECB's rate has been unusually wide, partially due to Norway's weaker krone and its resilient economy fueled by oil and gas sectors.
Factors such as persistent inflation, a weaker NOK, and resilient growth have contributed to the bank's need for higher policy rates compared to the ECB. Even after the ECB raises its rate to 2.50% in September, a significant gap of nearly 1.75 percentage points will persist. However, the analysts believe further cuts from Norges Bank beyond 2027 are likely, bringing the policy rate differential closer to the typical range observed in the past decade.
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