MNI Norges Bank Review - March 2025: Easing Cycle Pushed Back

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: MNI Norges Bank Review - 2025-03.pdf

EXECUTIVE SUMMARY: 

• Norges Bank held their policy rate at 4.50%, in line with consensus but against prior guidance for a 25bp cut.  The recent uptick in inflationary pressures was unsurprisingly the main reason for the decision, with improved prospects for near-term activity and a lower-than-expected unemployment rate also cited.
• The March MPR rate path saw an upward revision of between 25-40bps through the forecast horizon, which was broadly in line with the estimates MNI had seen ahead of the decision. 
• The policy statement suggested the March rate path is consistent with 2x25bp cuts through the course of this year (i.e. a rate of 4.00%), which was re-iterated in the post-decision press conference. Notably, the policy statement does not include meeting-specific guidance. 
• Uncertainty was a key theme in the policy statement and press conference. The Governor played down the decision to deviate from prior guidance, noting that the Committee always emphasises uncertainty with its future decisions.
• At the time of writing, analysts generally expect Norges Bank to deliver either one or two cuts in 2025. September appears the most favoured meeting for the start of the easing cycle, but some have highlighted risks of a move in June.