Norwegian Key Policy Rate 4.25% vs. Exp. 4.25% (Prev. 4.25%); The Committee judges that a restrictive monetary policy is still needed but that it will likely be appropriate to continue with a cautious normalisation of the policy rate ahead

• The economic outlook is uncertain, but if the economy evolves broadly as currently envisaged, the policy rate will be reduced further in the course of 2025.


• If the policy rate is lowered too quickly, inflation could remain above target for too long.


• On the other hand, an overly tight monetary policy stance could restrain the economy more than needed to bring inflation down to target.


• If prospects suggest that wage and price inflation will remain elevated for longer than projected, a higher policy rate than envisaged in June may be required.


• The overall outlook for the Norwegian economy appears to have remained broadly unchanged (since June).

Reaction details (09:07)

• EUR/NOK saw two-way price action following the announcement before returning to unchanged levels.

Analysis details (09:07)

• The release was very much as expected with policymakers opting to stand pat on policy given the recent rebound in underlying inflation and depreciation of the NOK.


• Given it was not an MPR meeting, we didn't get much in the way of quantitative details from the Norges Bank over how it sees the rate path in the coming years.


• However, from a qualitative perspective, the Bank judges that policy is still restrictive and will need to be normalised. That being said, policymakers are wary of lowering the rate "too quickly" and acknowledge that a higher policy rate than envisaged in June may be required in the event that wage and price inflation remains elevated for longer than projected.


• Markets price circa 43bps of loosening by year-end, which would imply one full 25bps reduction and a 72% chance of another.

14 Aug 2025 - 09:00- Fixed IncomeImportant- Source: Reuters