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Nomura expects Norges Bank to keep its policy rate at 4.25% in August

The outlook hinges on whether new inflation prints reduce the chance of further hikes this year, with rate cuts seen as off the table.

Reported · Written up by our desk · Central Banks

Nomura analysts expect Norges Bank to hold its policy rate at 4.25% at its August meeting, pointing to softer underlying inflation and generally benign domestic data, according to an FXStreet note.

They cite that underlying inflation slowed unexpectedly in June to 2.7% year over year, the first time below 3%, and remained at that level in July data, against expectations for a slight re-acceleration.

While Nomura said Norges Bank could continue to signal the possibility of a hike, they view the bigger question as how future guidance on additional tightening develops, arguing that downside CPI-ATE surprises have reduced the probability of more tightening.

The analysts also said they do not expect rate cuts, and noted Norges Bank is not expected to update forecasts or policy-rate projections in August, though it may comment that the monetary policy outlook has shifted since the June projection.

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