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MNI Norges Bank Preview: Sep '24 - Don’t Expect A Dovish Tilt

The Norges Bank is unanimously expected to leave the policy rate on hold at 4.50% at its September meeting.
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MNI (LONDON) - EXECUTIVE SUMMARY

  • The Norges Bank is unanimously expected to leave the policy rate on hold at 4.50% at its September meeting. This meeting comes with an updated MPR and set of projections. 
  • We think there is scope for a small downward revision to the rate path, which could re-open the door to a rate cut in December (after the June MPR rate path pushed the likelihood of the first rate cut into early 2025). However, we don’t expect the policy statement to see wholesale changes.
  • The assumed rate path adjustment would reflect softer inflation and activity outturns than had been forecasted in the June MPR, as well as increases in global rate cut expectations and lower spot oil prices. However, any downward revision will be limited by the weaker-than-projected NOK. 
  • Analysts are unanimous in expecting the Norges Bank to remain on hold, and generally expect a downward revision to the rate path. However, there are diverging views on the magnitude of this downward revision.
  • Current market rate cut pricing for the remainder of 2024 and 2025 seems stretched to us, given the Norges Bank appear in no rush to signal the start of policy easing. As such, risks appear tilted towards a hawkish reaction, even if the rate path sees a downward revision.

For the full preview, including a summary of sell-side views, see here: MNI Norges Bank Preview - 2024-09.pdf

 

 

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MNI (LONDON) - EXECUTIVE SUMMARY

  • The Norges Bank is unanimously expected to leave the policy rate on hold at 4.50% at its September meeting. This meeting comes with an updated MPR and set of projections. 
  • We think there is scope for a small downward revision to the rate path, which could re-open the door to a rate cut in December (after the June MPR rate path pushed the likelihood of the first rate cut into early 2025). However, we don’t expect the policy statement to see wholesale changes.
  • The assumed rate path adjustment would reflect softer inflation and activity outturns than had been forecasted in the June MPR, as well as increases in global rate cut expectations and lower spot oil prices. However, any downward revision will be limited by the weaker-than-projected NOK. 
  • Analysts are unanimous in expecting the Norges Bank to remain on hold, and generally expect a downward revision to the rate path. However, there are diverging views on the magnitude of this downward revision.
  • Current market rate cut pricing for the remainder of 2024 and 2025 seems stretched to us, given the Norges Bank appear in no rush to signal the start of policy easing. As such, risks appear tilted towards a hawkish reaction, even if the rate path sees a downward revision.

For the full preview, including a summary of sell-side views, see here: MNI Norges Bank Preview - 2024-09.pdf