Nomura analysts Josie Anderson, George Buckley, and Andrzej Szczepaniak anticipate that Norges Bank will maintain its policy rate at 4.25% during the upcoming August meeting, citing softer underlying inflation and benign domestic data as primary reasons for this stance [1]. Underlying inflation in Norway unexpectedly slowed to 2.7% year-on-year in June, marking the first time it has fallen below 3% since May 2025, and remained at that level in July, contrary to expectations of a slight re-acceleration [1]. This lower-than-expected inflation is seen as the main factor behind the likely decision to keep rates unchanged, despite previous signals from Norges Bank that a rate hike was possible at the last meeting [1].
The June meeting minutes revealed that some members of Norges Bank had expressed concerns about the policy stance not being restrictive enough to bring inflation down, which had led Nomura to previously expect a rate hike in August rather than September [1]. However, the recent soft inflation data has reduced the likelihood of an August hike [1].
A key focus for the upcoming meeting will be the central bank's guidance on future rate hikes. Norges Bank will not update its forecasts or policy rate projections in August, but may acknowledge that the recent inflation outcomes have altered the monetary policy outlook, making a rate hike less likely than previously suggested [1]. Nomura expects that the central bank's guidance could indicate a lower probability of a second rate hike this year compared to the June outlook, though they note that uncertainty remains high [1].
No immediate market reaction or forward-looking analyst opinions beyond Nomura's expectations are discussed in the source [1].
CONCLUSION
Norges Bank is expected to keep its policy rate unchanged at 4.25% in August, as softer inflation data has reduced the likelihood of further tightening. Guidance from the central bank may signal a lower probability of additional rate hikes this year, though uncertainty remains elevated.