NORWAY
The bar to pushing Norges Bank off its pre-signalled course of a rate cut in March 2025 is probably quite high. There was little in this morning’s economic data to change the narrative following yesterday’s decision, which was in line with expectations.
- Credit indicator: Household credit growth rose 3.9% Y/Y in November, its highest annual rate this year. Statistics Norway highlights that expectations for future Norges Bank rate cuts (Norges signalled a cut in March 2025 at yesterday’s decision) may have played a role here.
- Norges Bank expects a sharp recovery in household consumption in 2025. The December MPR projects annual growth of 2.6% vs -0.1% in 2024.
- While improved credit growth should support consumption, Norges Bank’s primary thesis for the recovery rests on lower household interest expenses (Norwegian household debt-to-income ratio is over 200%, much of it on a floating-rate basis) and prospects for continued real wage growth.
- Unemployment: Registered unemployment was 2.1%, in line with the December MPR projections. NAV notes that the demand for labour remains high. Overall, the labour market remains relatively resilient across sectors, though Norges Bank has highlighted wide differences in employment prospects across industries.
Figure 1: Household Credit Growth (Y/Y %) vs Policy Rate
200 words