According to Nordea economists Kjetil Olsen and Sara Midtgaard, Norges Bank is expected to keep its policy rate unchanged at 4.25% at its upcoming meeting next week [1]. This expectation is based on June core inflation figures, which were significantly below the central bank's projections, and subdued inflation data anticipated for July [1]. Both unemployment and the Norwegian krone are reported to be broadly in line with Norges Bank's June forecasts, reducing the likelihood of an immediate policy move [1].
The economists note that if Norges Bank were to revise its rate path today, it would likely be lower than the one published in June, reflecting the recent inflation data [1]. Despite the current pause, Nordea still anticipates that Norges Bank will implement one additional rate hike later in the autumn [1].
Looking ahead, Nordea suggests that the gap between actual inflation and Norges Bank’s projected inflation path could narrow significantly after the August inflation release, which may influence future policy decisions [1].
CONCLUSION
Norges Bank is widely expected to maintain its policy rate at 4.25% in the upcoming meeting, given lower-than-expected inflation and stable economic indicators. However, a further rate hike remains possible later in the year, contingent on future inflation data.