Norges Bank likely to stand pat in May, says Nordea Bank

During its upcoming monetary policy meeting this week, the Norges Bank is likely to stand pat, according to a Nordea Bank research report. The subdued NOK since March calls for reduced downside risk to rates; however, Norges Bank would attempt to avert that conclusion. The Norwegian central bank will not present a new interest rate forecast; however, it is likely to compared the latest developments to the projections made in March.

News since March must have bolstered the central bank’s notion that inflation is close to the bottom and that capacity utilization is improving. Inflation rose a bit in March. This must have been reassuring for the central bank even if it was marginally lower than the forecast. The important figures for growth and capacity utilization have been rather solid.

The Norges Bank is expected to mention that the regional network and retail sales indicate towards increased growth. Still, a rise in capacity utilization and stronger growth is consistent with Norges Bank’s main view. The central bank is expected to highlight that there are evident signs of the likely cool down in the housing market.

The Norges Bank might try and avert giving any new signals at the meeting and leave it open if the development since March argues for higher or lower path, added Nordea Bank.