Norges Bank is expected to keep its key policy rate at 4.5% next Thursday, in line with the rate path set out in September. Recent indicators have been mixed, with core inflation coming in slightly higher and energy inputs firmer, including rises in oil and gas prices as well as electricity futures.
Offsetting Factors Impacting Policy Decisions
Offsetting that, the NOK has strengthened and retail sales have softened, pointing to less upward pressure.
Rate Path Outlook and Inflation Expectations
If a new rate path were published now, it would likely track the September profile at the front end, albeit marginally lower, while pencilling in a somewhat lower trajectory further out. Any shift towards easing would require clearer evidence that inflation is converging on the 2% target, with no expectation of that occurring before 2028.
