Norges Bank holds at penultimate meeting of 2025

Policy rate held steady in November: On 5 November, Norges Bank opted to leave its sight deposit rate unchanged at 4.00%, following September’s 25 basis points cut. The hold met market expectations as rates remained at their lowest level since August 2023.

Central Bank stands pat to assess the impact of past cuts: Norges Bank held interest rates steady at its November meeting, as no new information had been released indicating changes to the current economic outlook since the last meeting. Moreover, it deemed restrictive monetary policy necessary as inflation has yet to be contained and uncertainty continues to cloud the outlook. It argued that cutting rates too quickly could reignite price pressures and delay inflation’s return to target. On the flip side, a hike was off the cards, as tight monetary policy could restrain the economy more than is necessary to cool inflation.

Rates likely to enter 2026 unchanged: Norges Bank announced that the future path of the policy rate will hinge on economic developments and incoming data. That said, it also added that if the economy continues to evolve in line with its current outlook, rate reductions would likely resume in 2026. A vast majority of our panelists also expect rates to remain unchanged through end-2025, yet a minority have penciled in a final 25 basis points cut for the last meeting. Rate cuts are then largely expected to resume in 2026. Norges Bank is set to reconvene one final time this year on 18 December, with its decision announced the following day.

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