Danske Research Team
Danske Bank A/S
Business as usual
As expected, Norges Bank (NB) kept interest rates unchanged at today’s meeting. In the press release, NB gave no indication of any imminent change to the strategy published in the latest MPR from September. Domestic growth and inflation have been as expected, and lending margins have been cut. Hence, we still expect NB to be on hold for a long time. However, NB did acknowledge the downside risks stemming from signs of weaker global growth and the lower oil price. At the press conference, Governor Olsen stressed that the effect on the economy and hence the rate path from lower oil prices is uncertain, and will be examined more carefully ahead of the MPR in December.
Hence, although NB perhaps sounded less dovish than many had expected, we strongly recommend being open-minded ahead of the MPR. In particular, the development in the oil price and the next Oil Investment Survey on 3 December will be essential to the new rate path in December. The focal point for the market will be whether NB once again, as at the June meeting, includes a probability of a rate cut in 2015. If it does, it will be a clear signal that NB has moved away from the neutral stance at the September meeting to a new easing stance.
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