MNI Norges Bank Preview: Jan 26 - More Focus On March Decision

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EXECUTIVE SUMMARY: 

• Norges Bank is firmly expected to hold the deposit rate at 4.00% on Thursday. This will be an interim decision where only a concise update of economic conditions will be presented, and not an updated MPR or rate path projection.
• Norges Bank rarely makes material guidance changes at these interim decisions, and the limited domestic developments since the December meeting warrant a continuation of the Board's cautious approach to easing. If anything, the risks appear tilted towards marginally hawkish guidance tweaks
• CPI-ATE inflation was a tenth higher than expected at 3.1% Y/Y in December, and the registered unemployment rate fell back below Norges Bank’s projections. The modest strengthening in the I-44 effective exchange rate since the last meeting shouldn't have a material impact on deliberations. Meanwhile, it is too early to take policy signals from recent volatility in crude oil and natural gas markets. The March decision will attract much more attention, with Norges Bank having received more details on inflation, output, the labour market and 2026 union wage negotiations to assess the appropriate policy stance.
• The median analyst looks for two 25bp cuts this year to 3.50%, but the range of forecasts remains wide. Dovish analysts look for three cuts in 2026, while others look for one or even no cuts.