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NORWAY: Analysts See Marginal Hawkish Impact On Norges Rate Path From '25 Budget

NORWAY
CEEMEABulletNorwayGlobalFixed Income BulletsForeign Exchange BulletsRegionMarkets

Analysts generally view the 2025 Norwegian budget as a little more expansionary than expected, in line with our assessment this morning. While the impact on the Norges Bank’s rate path is not expected to be large, the budget certainly won’t increase the probability of a rate cut in December. With respect to Norges Bank’s FX purchases, we note the following sell-side views:

  • SEB: “Norges Bank will transfer a total of NOK 82bn accrued at the government’s account at Norges Bank to the GPFG, hence having to exchange from NOK to FX”.
    • “Absent this transfer, the budget suggests Norges Bank would buy around NOK 100mn/day on average in 2025. However, including the transfer suggests NOK sales of roughly NOK 200mln/day, but the distribution of purchases will be made at Norges Bank’s discretion”.
  • DNB: “Based on the budget figures and own projections we expect NOK revenues from the net petroleum cash flow will continue to exceed the oil-adjusted deficit and that Norges Bank must purchase FX also in 2025”.
  • JP Morgan: “Norges Bank should no longer sell, but buy NOK worth 0.1bn/day, on average, in 2025 (vs. currently selling 0.4bn)"... “We had expected the Budget to show a smaller change”.
    • “In recent years, actual NOK transactions have in some cases deviated a lot from what was implied by the budgets. Also, petroleum revenues have tended to be higher than simple models of energy prices would suggest. If this trend should continue, it would imply less NOK buying”
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Analysts generally view the 2025 Norwegian budget as a little more expansionary than expected, in line with our assessment this morning. While the impact on the Norges Bank’s rate path is not expected to be large, the budget certainly won’t increase the probability of a rate cut in December. With respect to Norges Bank’s FX purchases, we note the following sell-side views:

  • SEB: “Norges Bank will transfer a total of NOK 82bn accrued at the government’s account at Norges Bank to the GPFG, hence having to exchange from NOK to FX”.
    • “Absent this transfer, the budget suggests Norges Bank would buy around NOK 100mn/day on average in 2025. However, including the transfer suggests NOK sales of roughly NOK 200mln/day, but the distribution of purchases will be made at Norges Bank’s discretion”.
  • DNB: “Based on the budget figures and own projections we expect NOK revenues from the net petroleum cash flow will continue to exceed the oil-adjusted deficit and that Norges Bank must purchase FX also in 2025”.
  • JP Morgan: “Norges Bank should no longer sell, but buy NOK worth 0.1bn/day, on average, in 2025 (vs. currently selling 0.4bn)"... “We had expected the Budget to show a smaller change”.
    • “In recent years, actual NOK transactions have in some cases deviated a lot from what was implied by the budgets. Also, petroleum revenues have tended to be higher than simple models of energy prices would suggest. If this trend should continue, it would imply less NOK buying”