MNI Norges Bank Review: September 2025 - Hawkish Undertones

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EXECUTIVE SUMMARY: 

• Norges Bank cut rates by 25bps to 4.00% in September, in a decision that is widely being described as a “hawkish cut”. 
• The rationale for the rate cut was that “a cautious easing of monetary policy will pave the way for returning inflation to target without restraining the economy more than needed”. This came alongside a material upward revision to the September MPR rate path relative to June. On balance, upward revisions were larger than the estimates we had seen ahead of the decision. 
• In the policy statement, Governor Wolden Bache said that the forecast presented today is consistent with one rate cut per year in the coming three years”, implying a slow burn to a terminal rate of around ~3.25%.
• In the press conference, the Governor avoided any timeframe-specific guidance. That will keep NOK markets sensitive to incoming data releases, with significant uncertainty around the timing and pace of future rate reductions.
• Overall, the signals from the September decision feel consistent with developments since June. The mainland economy is not in desperate need of a deep easing cycle.