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NORGES BANK: MNI Norges Bank Review: Sep '24 - Easing To Begin In Q1 '25

NORGES BANK
Central Bank NewsCEEMEANorges BankBulletNorwayGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

EXECUTIVE SUMMARY

  • Norges Bank held its policy rate at 4.50% as unanimously expected, and signalled that it will likely remain at current levels through this year, before “being gradually reduced from 2025 Q1”.  
  • The updated policy rate path saw a small downward revision through the forecast horizon, signalling a ~20% probability of a 25bp cut in December and near-certainty of such a move by the end of Q1 2025. Overall, the downward revisions appear a little smaller than had been expected by some analysts coming into the decision.
  • This elicited a hawkish reaction in markets, which were disappointed that the Norges Bank did not more explicitly open the door to a December cut. We had flagged in our preview that the risks appeared skewed in a hawkish direction.
  • The decision prompted some analysts to push back their forecasts for the first rate cut.
  • Although the Norges Bank will likely remain hawkish for the remainder of this year, the September decision clearly sets the scene for cuts in 2025. 

See the full review, with a summary of sell-side analyst views, here.

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EXECUTIVE SUMMARY

  • Norges Bank held its policy rate at 4.50% as unanimously expected, and signalled that it will likely remain at current levels through this year, before “being gradually reduced from 2025 Q1”.  
  • The updated policy rate path saw a small downward revision through the forecast horizon, signalling a ~20% probability of a 25bp cut in December and near-certainty of such a move by the end of Q1 2025. Overall, the downward revisions appear a little smaller than had been expected by some analysts coming into the decision.
  • This elicited a hawkish reaction in markets, which were disappointed that the Norges Bank did not more explicitly open the door to a December cut. We had flagged in our preview that the risks appeared skewed in a hawkish direction.
  • The decision prompted some analysts to push back their forecasts for the first rate cut.
  • Although the Norges Bank will likely remain hawkish for the remainder of this year, the September decision clearly sets the scene for cuts in 2025. 

See the full review, with a summary of sell-side analyst views, here.