MNI Norges Bank Preview: June 2024 - Rate Path Revision Likely

EXECUTIVE SUMMARY

• The Norges Bank are unanimously expected to leave the policy rate on hold at 4.50%. Main interest will lie in the updated policy rate path projection within the June Monetary Policy Report, which will inform the guidance around how long rates will be held at current levels.
• At the May meeting, the Norges Bank introduced a hawkish tilt to its guidance, noting that the “the data so far could suggest that a tight monetary policy stance may be needed for somewhat longer than previously envisaged”. This suggests an upward revision to the rate path presented in March, and the data since the May meeting has supported that notion.
• CPI-ATE inflation remains below the March MPR rate path, but stubborn services inflation and firm wage growth expectations should prompt the Norges Bank to push back the likelihood of the first rate cut towards the December meeting, and possibly into Q1 2025.
• Analysts are unanimous in expecting the Norges Bank to remain on hold in June, and generally expect upward revisions to the rate path.
• We don’t expect a major market reaction to the June decision, with a hold in rates and an upward rate path revision firmly embedded in consensus.

Our full preview, including a summary of analyst views, can be found here:

MNI Norges Bank Preview - 2024-06.pdf