Norwegian Key Policy Rate 4.50% (exp. 4.50%, prev. 4.50%); "the policy rate will most likely be reduced in March 2025"

• "The forecast is little changed relative to the September forecast but indicates a somewhat smaller rate reduction in the coming years."


• "The Committee noted that activity in the Norwegian economy appears to be holding up better than previously projected.

MPR:

• 
  December MPR (2025): Q1-2025 4.46% (prev. 4.40%), Q2-2025 4.22% (prev. 4.21%), Q3-2025 4.00% (prev. 3.99%), Q4-2025 3.80% (prev. 3.73%); Q4-2026: 3.16% (prev. 3.02%)


•  

Reaction details (09:10)

• Modest two-way reaction seen in EUR/NOK. Initially, the NOK came under pressure on the explicit nod to March before paring given MPR adjustments; as the dust settles, EUR/NOK is back towards pre-release levels of 11.7680.

Analysis details (09:10)

• Overall, a balanced decision from the Norges Bank. The policy rate was held at 4.50% as expected and the statement now guides us to the first cut "most likely" occurring in March 2025, while the base case among desks, the explicit guide to March is perhaps somewhat dovish on the margin. However, any dovishness from this has been offset by a modest adjustment to the repo forecast, which sees the Q4-2025 projection at 3.80% (vs. Sep. MPR 3.73%) an adjustment which points to three 25bps cuts in 2025, as opposed to the slim probability of four that the September MPR technically pointed to.

19 Dec 2024 - 09:00- Important- Source: Reuters