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Norges Bank Policy Rate 4.5% (consensus 4.5%) in Mar-24

• The Norges Bank decided to keep the policy rate at 4.5% to balance inflation control and economic growth amid slowing but above-target inflation and modest economic activity.
• Inflation is now expected to decelerate somewhat faster than anticipated, economic growth is more subdued in the first half of 2024 before improving, while unemployment rises slightly less than previously expected.
• The Committee is ready to adjust the policy rate in response to evolving economic and inflationary trends. It aims to steer inflation towards the 2% target by the end of 2027 while navigating prevailing uncertainties.

BoE Hawks Read the Writing on the Wall

• The BoE held the Bank rate at 5.25%, with only one dissent for a cut as the two hawks stopped pushing for a hike that was not going to happen, given broad resistance.
• An extended period of restrictive policy is still envisaged, with persistent inflationary pressures rather than the spot CPI rate guiding when rate cuts begin.
• Wage and service inflation is not seen returning to target sufficiently rapidly yet, and we expect that problem to persist, leaving our call for the first cut back in Feb-25.

By Philip Rush