MNI Norges Bank Review: June 2026 - Getting Ready to Go Again

Hidden PDF

EXECUTIVE SUMMARY: 

• Norges Bank held the policy rate at 4.25%, as unanimously expected, but maintained a firmly hawkish stance which guided for at least one more hike this year.
• The policy statement noted that “There is uncertainty about future economic developments, but the Committee's current assessment of the outlook implies that it will likely be necessary to raise the policy rate further at one of the forthcoming monetary policy meetings.".
• Further highlighting that an August hike is a distinct possibility was the June MPR rate path, which was revised up by more than expected to a new peak of 4.55% in Q4 2026 and Q1 2027. The Q3 point was 4.32% (vs 4.26% prior), which is consistent with a hike in Q3 and a 50% implied probability of a move as soon as August. The new peak also indicates an outside chance of a follow-up hike to 4.75% later this year.
• The August decision will depend crucially on incoming inflation data (July 10, August 10). Upside CPI-ATE surprises could cement a hike at that decision, while in line readings would leave it a very close call. Further out, we still question whether the Board will have to hike beyond 4.50% to contain underlying inflation pressures, particularly with a negative output gap building through the forecast horizon.