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NORGES BANK: VIEW: Nordea No Longer Expect Any Rate Cuts In 2025 and 2026

NORGES BANK
Central Bank NewsCEEMEANorges BankBulletNorwayMarketsFixed Income BulletsForeign Exchange Bullets

After removing their call for a March Norges Bank cut on Monday following the stronger-than-expected February inflation report, Nordea now no longer expect any rate cuts in 2025 or 2026. This cements Nordea’s status as the hawkish outlier when it comes to Norges Bank rate forecasts.

  • “Registered unemployment fell to 2.0% in January and February from 2.1% reached last summer. The number of unemployed persons has actually fallen three month in row. In our view this is really significant for monetary policy”.
  • “EU and Germany has announced huge spending packages that could increase European spending and investments by some 2% of GDP per year over several years"…"Fiscal policy in Norway, which already is very stimulative and in the tune of 1% of GDP for 2025, might therefore be even more stimulative”.
  • “Moreover, households purchasing power increased a lot last year (wage growth outpaced inflation by 2.5pp) and will increase a lot also this year”…” In our view, there is a clear upside to Norges Banks expectation of wage growth this year of 4.2%”.
  • "Growth in the Norwegian economy is therefore expected to pick up going forward, even without rate cuts. This should keep unemployment low. Core inflation will probably hover around or above 3% for much of the next two years".
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After removing their call for a March Norges Bank cut on Monday following the stronger-than-expected February inflation report, Nordea now no longer expect any rate cuts in 2025 or 2026. This cements Nordea’s status as the hawkish outlier when it comes to Norges Bank rate forecasts.

  • “Registered unemployment fell to 2.0% in January and February from 2.1% reached last summer. The number of unemployed persons has actually fallen three month in row. In our view this is really significant for monetary policy”.
  • “EU and Germany has announced huge spending packages that could increase European spending and investments by some 2% of GDP per year over several years"…"Fiscal policy in Norway, which already is very stimulative and in the tune of 1% of GDP for 2025, might therefore be even more stimulative”.
  • “Moreover, households purchasing power increased a lot last year (wage growth outpaced inflation by 2.5pp) and will increase a lot also this year”…” In our view, there is a clear upside to Norges Banks expectation of wage growth this year of 4.2%”.
  • "Growth in the Norwegian economy is therefore expected to pick up going forward, even without rate cuts. This should keep unemployment low. Core inflation will probably hover around or above 3% for much of the next two years".