MNI Norges Bank Review: May 2026 - Not Waiting Around

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EXECUTIVE SUMMARY: 

• Norges Bank raised the deposit rate by 25bp to 4.25% in May, against consensus expectations for a hold but in line with our expectations. The tone of the policy statement suggested the Committee had no interest in waiting till June to follow through on the hawkish March guidance, noting that “inflation is too high and has run above target for several years”.
• The March guidance and rate path were re-affirmed, with the statement noting that “the policy rate forecast presented in March indicated an increase in the policy rate to between 4¼% and 4½% by the end of the year. The monetary policy outlook does not appear to have changed materially since that time”.
• Overall, we classify the decision as a neutral hike considering the signals from the March MPR. There was no forceful guidance for another hike as soon as June, suggesting the Committee is happy to take time over the coming months to assess domestic data and Iran war developments. Another hike in H2 feels probable absent material progress on CPI-ATE inflation. However, we remain of the view that the Board will not feel pressured to hike more than twice this year to restrain underlying inflation pressures, especially with rates already in restrictive territory.