Norges Bank Holds Steady: Deciphering the Shift in Rate Hike Expectations

Norway: Norges Bank to keep rates on hold after all

Back in September, Norway’s central Bank signalled that a December rate hike was likely. By November, policymakers were watering down those promises and said that further progress on the inflation outlook could lead to a pause. Since then, we’ve seen both a pronounced fall in oil prices and a big repricing lower in global rate expectations. Both are dovish from the point of view of Norges Bank’s model-based approach to setting policy. It’s a close call, but we think the balance has shifted in favour of no rate hike at Thursday’s meeting. Market pricing is leaning this way too