Norges Bank preview: Unchanged

Norges Bank is likely to leave its key rate at 4.5% and maintain broadly unchanged communication because opposing economic signals leave the September rate path largely intact.

• Core inflation was 0.1 percentage points above the September projection, while oil, gas and electricity futures also increased, all pointing to a slightly higher rate path.
• The Norwegian krone strengthened, with EUR/NOK falling partly because of higher energy prices and a weaker euro amid turmoil in France; foreign interest rates also edged lower.
• Registered unemployment declined in September to marginally below Norges Bank's projection, and employment growth was slightly stronger than expected.
• Retail sales remained modest, while wage growth may finish the year slightly below Norges Bank's estimate, although monthly and annual wage measures are not directly comparable.
• Nordea estimates that a new rate path would be close to the September path at the front end, perhaps marginally lower, and somewhat lower further out.

Takeaway: Norges Bank is unlikely to signal rate cuts before 2028 because core inflation remains at 3% and policymakers need clear evidence of convergence toward the 2% target.