Norway: Norges Bank holds rates in August
Markets had anticipated a hold: At its meeting on 13 August, Norges Bank held rates at 4.25% for a second straight meeting, following May’s 25 basis point hike. The hold had been expected by markets.
Time needed to assess inflation outlook: Norges Bank decided not to cut rates because both headline and core inflation remained above the 2.0% target through July. Moreover, wage pressures remain high. Still, the Bank opted against raising the policy rate, as price pressures fell more than expected in July and policymakers are keen to avoid slowing the economy.
Rate hikes remain on the table for 2026: Looking ahead, Norges Bank has kept the door open for further tightening, noting that the rate path will hinge on incoming data on inflation, economic activity and labor-market data ahead of its 24 September decision. The Bank’s June projection still points to a policy rate “somewhat above 4.5%” by year-end, and that hasn’t been revised despite the summer’s softer inflation print. Accordingly, most of our panelists expect one final 25 basis point hike to close that gap by year-end, while a couple see the Bank staying on hold.
Norges Bank reconvenes on 24 September.