TD Securities expects Norges Bank to keep its policy rate unchanged at 4.00%, noting stubbornly sticky inflation and risks of re-acceleration after the Middle East crisis and energy price shock. The bank anticipates a cautious statement that stresses elevated global uncertainty and less-committal projections for 1–2 rate cuts this year, dependent on conflict duration.

Policy on hold with risks monitored

"We expect Norges Bank to keep policy rate on hold at 4.00%."

"Inflation remains stubbornly sticky at 2.8% y/y on headline measure and is now at risk of re-acceleration following the onset of the Middle East crisis and energy price shock."

"The statement will likely mention the elevated global uncertainty, and even though restrictive monetary policy is still needed, the balance of risks will need to be monitored before the next step in policy rate is decided."

"Projections will also likely mirror the uncertainty and be less committal to a forecast of 1-2 rate cuts for this year, instead outlining dependencies on conflict duration."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)