Norges Bank is expected to deliver one final rate hike in November before pivoting to gradual cuts, according to Nomura analysts. The Norwegian central bank faces persistent inflation pressures that warrant tightening now, but economists anticipate a shift in policy direction as price pressures eventually ease. Nomura projects a 25 basis point reduction sometime in 2025, followed by additional cuts extending beyond 2027 that would bring rates down towards 3.50 percent. The forecast reflects a delicate balancing act between controlling stubborn inflation in the near term while positioning for a softer monetary stance over the medium to long term. Traders should watch upcoming Norwegian inflation data closely, as any deviation from expectations could alter the central bank’s rate trajectory. The krone may see volatility around the anticipated November decision, with current positioning likely pricing in the final hike already.
FXnCO Insight
NOK traders should prepare for short-term strength into November’s expected hike, but position for gradual weakening as the rate-cutting cycle begins in 2025.
Source: FXStreet