MNI Norges Bank Review - Aug '25: June Outlook Still Intact

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EXECUTIVE SUMMARY: 

• Norges Bank held rates at 4.25% as unanimously expected, while the guidance language was essentially unchanged compared to June. Norges Bank continues to expect the policy rate “will be reduced further in the course of 2025”, if “the economy evolves broadly as currently envisaged”. The June rate path that indicated “one or two additional rate cuts in the course of the year” is still appropriate
• Although the communication lacked a clear signal for a September cut, it certainly didn’t rule out such a move. The Committee seems quite content in keeping its options open.
• There were some hawkish elements within the Committee’s Monetary Policy Assessment, which likely drove the initial market reaction alongside the absence of meeting-specific guidance. However, these moves quickly faded. The bottom line is that the policy rate outlook presented in June has not actually changed that much following the August decision.
• We haven’t seen any analyst view changes since the decision. Consensus remains in favour of cuts at the September and December MPR decisions, which is in line with market pricing.