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Norges Bank likely to stand pat in October, may hike rate in Q1 2019

Norges Bank is set to meet next week for its monetary policy decision. According to a Nordea Bank research report, the central bank is expected to keep it on hold.

During its September meeting, Norges Bank had hiked its key interest rate and indicated a next hike in the first quarter of 2019. The meeting in October is an interim meeting and there would be neither new interest rate forecast nor any press conference. Nevertheless, in the board’s general assessment the central bank will compare the latest developments to the projection made in September, stated Nordea Bank.

With no rate path the focus might be on whether the board’s assessment shows any change in view. Meanwhile, the monthly GDP figure for August might probably be the main source of information regarding growth. Mainland GDP growth had dropped 0.2 percent sequentially in August. Agriculture and fishing had negatively contributed 0.5 percentage points. Nevertheless, the demand picture was quite solid with mainland demand growing 0.5 percent sequentially. Norges bank might possibly judge the soft production as temporary noise and if anything gives most weight to the strong demand picture.

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