Nomura Research analysts Josie Anderson, George Buckley and Andrzej Szczepaniak, now expects Norges Bank to deliver only one further policy rate cut, in December 2026, taking the rate to 3.75%. The change follows a broad-based upside surprise in Norway’s January inflation and stronger-than-expected wage growth, which Nomura believes will keep inflation sticky even as it gradually slows.

Sticky inflation curbs rate cut scope

"Norway’s inflation in January surprised notably to the upside as CPI-ATE inflation (also known as underlying inflation, which adjusts for tax and excludes energy) rose 0.3pp to 3.4% y-o-y (Nomura: 2.9%, Norges Bank: 2.9%, consensus: 3.0%). CPI inflation rose 0.4pp to 3.6% y-o-y, also well above expectations (Nomura: 3.2%, Norges Bank: 2.7%, consensus: 3.0%)."

"The continued strength in wage growth adds to the view that inflation will remain sticky in 2026."

"In light of today’s large upside surprise in inflation, we revise our expectation for Norges Bank policy rate cuts and now expect only one more cut, in December 2026. Our new projection would take the policy rate to 3.75%, which is above Norges Bank’s view of neutral (2.25%-3.50% in the long run)."

"A key risk to our view is NOK’s recent appreciation against USD and EUR, which may add to disinflation pressures from imported products. However, we have already incorporated some slower goods price inflation into our forecast, and this is partly why we keep one more cut in our forecast, as we still expect inflation to gradually slow."

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