Norges Bank Preview: Forecasts from five major banks, back to 25 bps hikes

Norges Bank will announce a new rate decision on Thursday, November 3 at 09:00 GMT and as we get closer to the release time, here are the expectations forecast by the economists and researchers of five major banks regarding the upcoming central bank’s Interest Rate Decision. The Governor is scheduled to speak some 30 minutes after the rate decision announcement. 

Norges Bank is expected to hike rates by 25 basis points. The next Monetary Policy Report with new forecasts and analyses will come out in December.

Nordea

“We believe the key rate will be raised to 2.5% from 2.25%, in line with the signaling from the central bank at the previous meeting in September. While we don’t expect a 50 bps rate hike in November and hold our view for 25 bps rate hike in December, we cannot totally exclude the probability of a 50 bps hike next month. If unemployment continues to stay at very low levels, core inflation continues to surprise on the upside and the NOK weakens significantly, Norges Bank might feel the need to act more forcefully.”

Danske Bank

“We expect Norges Bank to stick to its plan of raising the policy rate by 25 bps. While we would not completely rule out a 50 bps hike, we consider the chances of this to be down around 20%. We also expect the bank to signal a further rate increase in December, again of 25 bps. On the other hand, we are now looking at quite a sharp economic slowdown, with unemployment also now beginning to climb, and so we expect Norges Bank to go on hold after the December meeting.”

ING

“Having opted for multiple 50 bps rate hikes through the summer, Norway’s central bank hinted it could slow the pace back to 25 bps for its final few moves. The question is whether it instead decides to continue to front-load tightening, and we think it will. Higher overseas rate expectations and another massive upside surprise on inflation suggest we should expect another 50 bps hike on Thursday. However that would take the central bank close to the end of its hiking cycle, and we are pencilling in one (or perhaps two) more 25 bps moves before it pauses.”

TDS

“We think Norges Bank will follow through with its guidance from the last meeting and deliver a 25 bps hike, despite the substantial upside surprise to the last inflation print and improvements in growth. Instead, we expect the Bank to continue to signal that it will respond to the incoming data, and keep the door open to a 50 bps hike in December.”

Swedbank 

“Our expectation is for Norges Bank to end its hiking campaign at 3.00% by this year’s end, and to refrain from hiking rates next year. We expect a 50 bps hike at the meeting in November and 25 bps in December. We expect Norges Bank to start cutting rates in September 2023.”