MNI Norges Bank Review: May '25 - March Guidance Intact

FOR THE FULL PUBLICATION PLEASE USE THE FOLLOWING LINK: MNI Norges Bank Review - 2025-05.pdf

EXECUTIVE SUMMARY: 

• Norges Bank held rates at 4.50% as unanimously expected. The guidance that rates “will most likely be reduced in the course of 2025” was unchanged, with few other signals provided in the policy statement, monetary policy assessment or press conference. As such, the market reaction was very limited.
• As we discussed in our preview, there have been offsetting developments since the March decision for Norges Bank’s hypothetical rate path (new forecasts were not presented at this meeting). Weaker global growth, increased foreign rate cut expectations and lower oil prices pull down on the hypothetical rate path, but the weak krone pushes it higher. Overall, the statement did not indicate which of these forces dominates.
• We haven’t seen any analyst forecast changes since the decision. The majority continue to expect the easing cycle to start in September, before another 25bp cut in December. 
• Immediate focus in Norway turns to the April CPI report on May 9, which may end up being more market moving than the May decision. Norges Bank’s March MPR (alongside current analyst consensus) projects CPI-ATE inflation at 3.2% Y/Y.