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NORGES BANK: Base Case For Policy Still Intact Following Q4 Expectations Survey

NORGES BANK
Central Bank NewsCEEMEANorges BankBulletNorwayMarketsFixed Income BulletsForeign Exchange Bullets

Norges Bank’s Q4 Expectations Survey indicated a broad-based fall in 1-year ahead expectations, but more mixed developments in longer-term expectations. Wage growth expectations also remain above the Norges Bank’s 2025 projections. Overall, the survey doesn’t support a deviation from Norges Bank’s base case, where rate cuts are expected to start from Q1 2025. 

  • Compared to the Q3 survey, 1-year ahead inflation expectations amongst economists, social partners and households fell 0.2pp to a range of 2.9-3.3% Y/Y. Business leader expectations fell 0.1pp, but remain more elevated at 4.1%. The fall in short-term expectations tracks steady disinflation in spot CPI-ATE rates through this year.
  • Norges Bank will pay particular attention to 5-yer ahead expectations, where sharp increases would be viewed as a sign that long-term expectations have de-anchored. In Q4, there was a 0.1pp uptick amongst social partners (to 2.8%) and households (to 3.9%). Economist expectations were unchanged at 2.4%, while business leader expectations fell 0.2pp to 4.0% Y/Y. Steady disinflation has helped prevent a re-acceleration of long-term expectations, but Norges will want to see further progress towards 2% before engaging in any form of dovish pivot.
  • Wage growth expectations generally decelerated, but all respondents except households see 2025 pay growth above the Norges Bank’s 4.3% projection. Economists and social partners see 12-month ahead wage growth at 4.9% (down 0.2pp) while business leaders expect 4.7% (down 0.1pp). Household expectations were unchanged at 3.3%.
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Norges Bank’s Q4 Expectations Survey indicated a broad-based fall in 1-year ahead expectations, but more mixed developments in longer-term expectations. Wage growth expectations also remain above the Norges Bank’s 2025 projections. Overall, the survey doesn’t support a deviation from Norges Bank’s base case, where rate cuts are expected to start from Q1 2025. 

  • Compared to the Q3 survey, 1-year ahead inflation expectations amongst economists, social partners and households fell 0.2pp to a range of 2.9-3.3% Y/Y. Business leader expectations fell 0.1pp, but remain more elevated at 4.1%. The fall in short-term expectations tracks steady disinflation in spot CPI-ATE rates through this year.
  • Norges Bank will pay particular attention to 5-yer ahead expectations, where sharp increases would be viewed as a sign that long-term expectations have de-anchored. In Q4, there was a 0.1pp uptick amongst social partners (to 2.8%) and households (to 3.9%). Economist expectations were unchanged at 2.4%, while business leader expectations fell 0.2pp to 4.0% Y/Y. Steady disinflation has helped prevent a re-acceleration of long-term expectations, but Norges will want to see further progress towards 2% before engaging in any form of dovish pivot.
  • Wage growth expectations generally decelerated, but all respondents except households see 2025 pay growth above the Norges Bank’s 4.3% projection. Economists and social partners see 12-month ahead wage growth at 4.9% (down 0.2pp) while business leaders expect 4.7% (down 0.1pp). Household expectations were unchanged at 3.3%.