February 13, 2025 17:08 GMT
NORGES BANK: Hawkish Leaning Excerpt From Wolden Bache's Annual Address
NORGES BANK
Key near-term policy excerpt from Norges Bank Governor Wolden Bache's annual address:
"We are approaching the time when we can ease monetary policy a little, but a restrictive stance is still needed. And we must be prepared for a higher interest rate level than we had been accustomed to over the past decade."
- Note that the Governor doesn't specify that the policy rate will likely be reduced in March, as was done so in the December and March policy statements.
- This screens a little hawkishly in and of itself, but perhaps more notable is the pledge to only ease policy "a little" and the need to maintain a restrictive stance .
- Norges Bank's nominal neutral rate estimated band is 2.50-3.50%, so the above pushes back somewhat on expectations for 4x25bp cuts through the course of this year.
- A reminder that this comes off the back of a much weaker than expected Q4 GDP reading (-0.4% Q/Q vs 0.3% expected) earlier this week (albeit dragged lower by the volatile inventory investment category).
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